KUALA LUMPUR (Aug 9): Malaysian stocks closed lower today after gaining 0.5% on Monday, as investors stay wary of local banks' exposure to the highly leveraged oil and gas (O&G) sector.
The benchmark FBM KLCI ended 0.97 point or 0.06% lower at 1,671.71 points.
Stocks like British American Tobacco (Malaysia) Bhd (BAT), Westports Holdings Bhd, PPB Group Bhd, Hong Leong Bank Bhd and MISC Bhd dragged the benchmark index into the red.
Analysts and fund managers have been expecting fund outflows from Europe to benefit the local market after bottoming out at 1,614.9 points two months earlier.
For the KLCI, Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew told theedgemarkets.com that any rally seems to be "on a gradual pace" as banking stocks are not contributing to the rise so far.
Brent, the benchmark for international crude oil prices, fell by 0.42% to US$45.20 (RM182.07) a barrel at 4.48pm.
"There is too much publicity in O&G companies' financial concerns. As long as oil prices are low, investors will worry about banks' exposure to the O&G sector," he said over the telephone today.
Singapore-based Swiber Holdings Ltd's liquidation scare last week caused a tremor effect felt by the republic's banks.
DBS Group Holdings Ltd reported a 6% drop in profit for its second quarter, according to Bloomberg, as provisions for Swiber's debts ate through the bank's interest income growth, while UOB Kay Hian was quoted saying that Singapore's banks might see a cascade of defaults from the O&G sector there.
In Malaysia, Pong said there are major local banks that have exposure to Singapore's O&G companies' debts. "And there are some locally listed O&G companies that have total debts that are multiple times their current market capitalisations," he added.
"But otherwise, investors are buying except for banks. The top-volume stocks saw rises today," Pong remarked.
The trading volume on Bursa Malaysia today was 2.1 billion shares valued at RM1.83 billion. Gainers outnumbered decliners at 405 and 360 respectively.
Malaysia Building Society Bhd was today's most actively traded counter, after reporting a 26.3% drop in its second-quarter net profit yesterday. Trailing it were Macquarie Capital Securities (Malaysia) Sdn Bhd's European style call warrants for SapuraKencana Petroleum Bhd, and TH Heavy Engineering Bhd.
The biggest gainers included Panasonic Manufacturing Malaysia Bhd, Fraser & Neave Holdings Bhd and UMW Holdings Bhd. The biggest decliners were BAT, PPB and Harrisons Holdings (Malaysia) Bhd.
Reuters reported earlier that Asian shares stood atop one-year peaks on Tuesday as a global search for yield drove a record inflow into emerging market funds, while the pound slipped to one-month lows on speculation of further policy easing in the UK.
Analysts at Bank of America Merrill Lynch noted the search for yield had led to the largest five-week inflow on record to emerging market debt funds and the longest inflow streak to equity funds in two years.
Japan's Nikkei 225 gained 0.69%, Australia's S&P/ASX 200 was up by 0.27%, South Korea's Kospi gained 0.71%, China's Shanghai Stock Exchange Composite Index rose by 0.71%, Shenzhen Stock Exchange Composite Index surged by 1.04%, while Singapore's Straits Times Index closed 1.51% higher. Hong Kong's Hang Seng Index, however, fell by 0.13%.