Revised budget offers little excitement to KLCI as ringgit dips against dollar

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KUALA LUMPUR (Jan 20): Investors showed little or no excitement over the economic intervention measures announced by Prime Minister Datuk Seri Najib Razak as the FBM KLCI fell at the midday break.

At 12.30pm, the index was down 3.51 points to 1,749.80.
Market breadth was negative with 367 losers and 275 gainers, while 282 counters traded unchanged. Volume was 1.03 billion shares valued at RM833.50 million.,

The ringgit declined 0.62% against the greenback and was quoted at 3.5938 versus the dollar.

The top losers included Panasonic Malaysia Manufacturing Bhd, British American Tobacco (M) Bhd, Hong Leong Financial Group Bhd, LPI Capital Bhd, Batu Kawan Bhd, Lay Hong Bhd, United Plantations Bhd, Tasek Corporation Bhd and Eastern & Oriental Bhd.

The actives included Sanichi Technology Bhd, KNM Group Bhd, Sumatec Resources Bhd, Hubline Bhd, My E.G. Services Bhd, Icon Offshore Bhd and Perisai Petroleum Teknologi Bhd.

The top gainers included Genting Plantations Bhd, DKSH Bhd, Aeon Credit Services (M) Bhd, My E.G., Lafarge Malaysia Bhd, Inari Amertron Bhd and Kuala Lumpur Kepong Bhd.

Asian markets rallied in relief on Tuesday after China reported its economy had not slowed as far as many had feared, a rare glint of brightness amid gloom over the global outlook, according to Reuters.

The IMF tried to snuff out even that by trimming its forecast for 2015 world growth by three tenths of a percent to 3.5 percent, blaming weaknesses in Japan and Europe, it said.

It also called on advanced economies to maintain stimulative monetary policies to avoid increases in real interest rates as cheaper oil adds to the risk of deflation, said Reuters.

M & A Securities research head Rosnani Rasul said to begin with, Wall Street was closed on Monday in observation of Martin Luther King Jr. public holiday.

So, regional and local investors turned to European equity market for trading catalysts on anticipation of the European Central Bank (ECB) hammering out its 4th quantitative easing (QE) measures this 22nd January (Thursday) during its policy meeting.

“Rumored to be worth up to US$640 billion or €550 billion, the QE is rolled out as a fist fight to combat deflation of which the pact has fallen into one given the -0.2% inflation for December from 0.3% for November,” she said.

Rosnani said given the size of the Eurozone economy and also the severity of its unemployment rate (i.e. in excess of 11%), the amount was only a drop in the ocean as that could be weighed by the current softness in global commodity prices.

“We don’t see any serious objection from Germany on the 4th QE, thanks to the sluggishness of commodity prices right now and in the immediate term.

“This QE prospect would definitely raise risk-taking in the regional markets today but for the local market, we think the economic intervention announcement by the prime minister today could cap the excitement,” she said.