KLCI retreats marginally in line with profit taking at regional markets

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KUALA LUMPUR (Nov 25): The FBM KLCI retreated marginally in early trade on Tuesday, weighed by losses at select blue chips in line with the profit taking at most regional markets.

At 9am, the FBM KLCI shed 0.28 points to 1,833.49.

The top losers included Kuala Lumpur Kepong Bhd, PPB Group Bhd, Oriental Holdings Bhd, Lafarge Malaysia Bhd, IM Corporation Bhd, Alliance Financial Group Bhd, RHB Capital Bhd, Cahya Mata Sarawak Bhd, SILK Holdings Bhd, Petronas Dagangan Bhd and Sime Darby Bhd.

Regionally, Asian shares gave back some of their China-inspired gains on Tuesday, while oil prices slumped ahead of this week's OPEC meeting, according to Reuters.

MSCI's broadest index of Asia-Pacific shares outside Japan was off 0.3 percent after rallying in the previous session following China's surprise interest rate cut, it said.

M & A Securities research head Rosnani Rasul in a market preview Tuesday said  Wall Street smashed into new high again on Monday driven by the feel-good-factor on China and the Eurozone’s next monetary strategy.

The S&P 500 and DJIA added 5.91 (0.29%) and 7.84 (0.04%) points to end at 2,069.41 and 17,817.90 respectively.

Rosnani said stocks in the US jumped on hopes that China may take further accommodative policy action and we do not discount this possibility.

She said this was especially so when China economy had decelerated to 7.3% in 3Q14, below the People’s Bank of China ceiling target of 7.5% and could be sliding further to its floor target of 7.0%

Rosnani said that in any case, the likely adjustment in policy rate needs to be done now before the US starts hiking its policy rate as China may have no option but to follow suit in order to avert deflationary pressure given the Yuan peg to the Dollar.

She said given this currency arrangement, China may not have much policy room to manoeuvres but to mirror the policy step by the US.

“This possibility may elevate the risk taking mood of the global equity market.

“The rumour that Eurozone may cough out its 4th monetary stimulus in December also helped sentiment although we need to warn that this weapon could be blunt one given the failure of the first 3.

“In any case, good feeling emanating from China will feed into higher risk taking and tolerance by the regional and local market, in our view,” she said.