KLCI rises 30.56 points after Fitch upgrades Malaysia; Ringgit strengthens

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KUALA LUMPUR (July 1): The FBM KLCI rose 1.8% after Fitch Ratings revised its outlook on Malaysian government debt to “stable”, from “negative”.

At 12.30pm, the KLCI settled at 1,737.20 on gains in stocks like Petronas Gas Bhd and Sime Darby Bhd.

Bursa Malaysia saw some 1.17 billion shares, worth RM1.01 billion, traded. There were 603 gainers against 150 decliners.

Top gainers included British American Tobacco (M) Bhd and Kuala Lumpur Kepong Bhd.

Meanwhile, six of the top ten decliners were KLCI-linked put warrants. These warrants trade under the short names of FBMKLCI-HI, FBMKLCI-HF, FBMKLCI-HH, FBMKLCI-HR, FBMKLCI-HL and FBMKLCI-HM.

As the put warrant prices have an inverse correlation with the underlying index, a decline in these warrants' prices may indicate a postive view on Malaysian shares.

The stronger ringgit was also closely watched. According to Bloomberg, the ringgit strengthened to 3.7380 against the US dollar and appreciated to RM2.7777 versus the Singapore dollar.

MIDF Investment Bank Bhd said in a note today that Fitch's upgrade was a supporting factor for the ringgit in the near-term.

“Nonetheless, we believe that the room for further upside is still limited, given that the sentiments across the emerging markets sphere is still negative.  We maintain our view that ringgit will close the year at RM3.70 – 3.75,” MIDF said.

Across Asian share markets, Japan’s Nikkei 225 was up 0.29%, while Hong Kong’s Hang Seng gained 1.09%.

Reuters reported Asian share markets were in a guarded mood on Wednesday, as Greece became the first developed economy to default on a loan with the IMF, setting the scene for another day of uneasy action.