KLCI tracks Japan share gains on BOJ surprise

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KUALA LUMPUR (Sept 21): The FBM KLCI rose 2.95 points or 0.2%, tracking Japan shares after the Bank of Japan (BOJ) said it would buy long-term Government bonds under its monetary policy.

The BOJ's move, announced after the conclusion of a two-day meeting today, is intended to maintain 10-year bond yields at around existing levels of zero per cent. Such sentiment weakened the yen, which augured well for the stock market.

Malaysia's KLCI closed at 1,658.73 points, after volatile trade while Japan's Nikkei 225 jumped 1.91%. Elsewhere, Hong Kong’s Hang Seng gained 0.6%.

Reuters reported world stocks rose on Wednesday, led by a surge in bank shares, while the yen weakened after the BOJ surprised markets by adopting a target for long-term interest rates.

The Japanese central bank maintained its 0.1% negative interest rate, but abandoned its base money target and instead, set a "yield curve control" under which it will buy long-term government bonds to keep 10-year bond yields around current levels of zero percent.

After the BOJ, investors will closely watch the U.S. Federal Reserve, which will also announce its monetary policy, following the conclusion of a two-day meeting today.

In Malaysia, Inter-Pacific Securities Sdn Bhd research head Pong Teng Siew told theedgemarkets.com that investors were cautious, ahead of the Federal Reserve's decision.

“They (investors in Malaysia) have seen what happened in other markets," Pong said.

Across Bursa Malaysia, 1.71 billion shares, valued at RM1.88 billion, were traded. Gainers outnumbered decliners at 460 and 329, respectively.

The biggest gainer and decliner was PPB Group Bhd and British American Tobacco (M) Bhd, respectively.

The most actively-traded counters included Felda Global Ventures Holdings Bhd and AirAsia Bhd.