Market Mayhem March 5, 2007Posted by elizabethwong in Economy, Malaysia, Note2Self.
5 March 2007
05-03-2007: Selling pressure continues
By Tamimi Omar, The Edge Daily
The Kuala Lumpur Composite Index (KLCI) fell another 4.64% on March 5 in tandem with sharp falls across the region as massive selling extended into the second week.
The KLCI erased nearly all its gains for 2007, sliding 53.99 points to 1,110.69. The broader FBM Emas fell 403.37 points to 7,317.65.
Turnover was 2.61 billion shares. Declining counters hammered gainers 1,100 to 42.
The Philippine Stock Exchange Index (PSEi) fell 4.54% or 142.46 points to 2,997.88, Hong Kong’s Hang Seng Index fell 4.03% to 8664.88, while Japan’s Nikkei 225 fell 3.34% to 16,642.25.
Singapore’s Straits Times Index fell 3.13% or 96.45 points to 2,982.29 and Shanghai “A” Share Index fell 1.59% to 2,926.6.
The sell-down also affected European markets, sending them lower in early trade.
The FTSEurofirst 300 index of top European shares was down 1.8% at 1,436.34, its lowest since Dec 5.
Shares on Germany’s DAX fell 2%, the FTSE 100 was down 1.6% and the CAC 40 fell 1.7%.
Fund managers said investors in the region were monitoring the opening of the Chinese Parliament’s annual full session on March 5 for any fresh initiatives to try to rebalance the nation’s fast-growing economy.
UBS AG global economist Paul Donovan described the sell-off as an over-reaction, adding that the countries’ economic fundamentals would prevail.
Investors became more cautious after weaker-than-expected economic data from the US and US Federal Reserve’s former chairman Alan Greenspan’s remarks about a possible recession in the US, he said.
“The sell-off of global stock markets, which has entered into its second week, will only be short term as economic fundamentals of these countries are still strong,” Donovan said at a media briefing in Kuala Lumpur on March 5.
On Malaysia, he said: “One or two weeks of financial volatility, especially the stock markets, would not affect foreign direct investments into the country.”
Analysts said local funds, which had entered the market on Feb 28 when the KLCI fell more than 100 points in the morning session, were now staying on the sidelines due to continued sell-down.
Hwang-DBS Investment Management Bhd chief investment officer David Ng said the recent sell-down was due to fears that China might implement further tightening policies that could significantly restrain its growth rate, while there are now fears of a US recession.
“Fundamentals are still intact and we expect the market to stablise and regain some upward momentum.
“However, there is fear on the streets. I suspect we are seeing redemption-led selling where fund managers are forced to raise cash to meet redemptions by unit holders,” he said.
Further unwinding of the yen carry trade was also evident as seen in the strengthening yen, he added.
UOB-OSK Asset Management Sdn Bhd chief executive officer/executive director Lim Suet Ling said panic selling pushed the market to oversold positions.
“The worst may be over as the fundamentals were still strong,” Lim said, adding that the KLCI strong support level was at 1,100.
“Fundamentally nothing has changed; inflation is manageable and oil prices are still steady,” Lim said. Light crude oil was quoted at US$60.73 (RM213.60) per barrel for April delivery.
Among heavyweights, Tenaga Nasional Bhd fell 60 sen to RM11, Malayan Banking Bhd dropped 40 sen to RM11.80 and Telekom Malaysia Bhd shed 20 sen to RM9.70.
Genting Bhd was the top loser, down 7.25% or RM2.50 to RM32, while Bursa Malaysia Bhd fell RM1.20 to RM8.70.
Resorts World Bhd, Kuala Lumpur Kepong Bhd and British American Tobacco (Malaysia) Bhd fell RM1 each to RM13.30, RM9.50 and RM41.25 respectively.
KNM Group Bhd and Kulim Bhd lost 85 sen each to RM9.15 and RM5.40 respectively.
MISC Bhd was among the gainers, up 15 sen to RM9.10 while Petronas Gas Bhd added 10 sen to RM8.80. RHB Capital Bhd rose six sen to RM4.44.