ID :
163053
Tue, 02/22/2011 - 13:31
Auther :
Shortlink :
https://oananews.org//node/163053
The shortlink copeid
Players hopeful for a rebound on Malaysia's stock exchange despite Middle East Woes
KUALA LUMPUR, Feb 22 (Bernama) -- The stock market closed easier Tuesday spooked by concerns over the escalating crisis in the Middle East but market players are still hopeful for a technical rebound soon given that fundamentals continue to be strong.
Buyers retreated to the sidelines as the political crisis spread to the Northern Africa state of Morocco while the situation in Libya worsened with 200 reportedly killed in clashes across the country.
Markets regionaly and globally were affected as crude oil prices soared reaching a two-year high of US$108.1 per barrel.
Analysts told Bernama that monetary tightening measures by China also had a hand in affecting sentiment on Malaysia's stock exchange and regional bourses.
Beijing increased lending and deposit rates by 25 basis points on February 8, which also raised the spectre of similar trends being adopted by central banks in Asia.
A wave of selling swept through the market today as shares closed broadly lower, with losers overwhelming gainers by 915 to 83 and the market barometer --the KLCI FTSE Bursa Malaysia KLCI (FBM KLCI) giving up 12.22 points to 1,513.63.
"The rising political tensions and monetary tightening in China are making traders risk-averse," a dealer said.
The key index hit an intra-day low of 1,510.18 at 11.40 am as
investors, especially foreigners, continuing to retreat to the sidelines.
The adverse external developments also pulled markets down across
the region with Japan's Nikkei index and Hong Kong's Hang Seng all trading about two per cent lower.
But analysts said investors should not be unduly concerned as the local market could withstand the selling pressure which in the process could present a buying opportunity for second and third liners.
"The fundamentals are still intact as the fall in the index is less than five per cent. If it is more than 10 per cent, then it can be considered a a correction," said Jupiter Securities research head, Pong Teng Siew.
He said it might be a while before a rebound takes place in view of concerns of the Middle East crisis spreading to countries with similar backgrounds.
The market was still able to withstand the pressure although second and third liners have borne the brunt of the fall, he said.
On the bright side however, "the current situation creates opportunities as second and third liners now are cheaper but no one is in the mood for bargain hunting yet as the crisis in Libya seems to be to spreading to other oil producing countries," he said.
He sees the KLCI level of 1,500 as sustainable.
The market has been climbing since March 2009 or 463 trading days and the pattern is still unbroken, Pong said.
"It is just a temporary hiccup early in the year. Once the situation stabilises, investors will return and the market will rebound," said another analyst.
Of course, with all the negatives around, it is a normal for the market to react in such a way, he said, blaming the herd mentality for the market's contraction.
The economy was still growing, albeit at a slower pace in the first half last year, but definitely stronger in the second half with implementation of projects under the Economic Transformation Programme, he said.
He expected the KLCI to rebound back to the 1,530-points level by next week unless the situation deteriorates further.
Another analyst with a brokerage company agreed that there will be a technical soon at the 1,531 level.
"Although investors are cutting losses, I don't think the market is badly affected," he said.
He said Asian stock markets have held up better than other markets in the United States and Europe, thanks to the positive economic recovery in the region.
Buyers retreated to the sidelines as the political crisis spread to the Northern Africa state of Morocco while the situation in Libya worsened with 200 reportedly killed in clashes across the country.
Markets regionaly and globally were affected as crude oil prices soared reaching a two-year high of US$108.1 per barrel.
Analysts told Bernama that monetary tightening measures by China also had a hand in affecting sentiment on Malaysia's stock exchange and regional bourses.
Beijing increased lending and deposit rates by 25 basis points on February 8, which also raised the spectre of similar trends being adopted by central banks in Asia.
A wave of selling swept through the market today as shares closed broadly lower, with losers overwhelming gainers by 915 to 83 and the market barometer --the KLCI FTSE Bursa Malaysia KLCI (FBM KLCI) giving up 12.22 points to 1,513.63.
"The rising political tensions and monetary tightening in China are making traders risk-averse," a dealer said.
The key index hit an intra-day low of 1,510.18 at 11.40 am as
investors, especially foreigners, continuing to retreat to the sidelines.
The adverse external developments also pulled markets down across
the region with Japan's Nikkei index and Hong Kong's Hang Seng all trading about two per cent lower.
But analysts said investors should not be unduly concerned as the local market could withstand the selling pressure which in the process could present a buying opportunity for second and third liners.
"The fundamentals are still intact as the fall in the index is less than five per cent. If it is more than 10 per cent, then it can be considered a a correction," said Jupiter Securities research head, Pong Teng Siew.
He said it might be a while before a rebound takes place in view of concerns of the Middle East crisis spreading to countries with similar backgrounds.
The market was still able to withstand the pressure although second and third liners have borne the brunt of the fall, he said.
On the bright side however, "the current situation creates opportunities as second and third liners now are cheaper but no one is in the mood for bargain hunting yet as the crisis in Libya seems to be to spreading to other oil producing countries," he said.
He sees the KLCI level of 1,500 as sustainable.
The market has been climbing since March 2009 or 463 trading days and the pattern is still unbroken, Pong said.
"It is just a temporary hiccup early in the year. Once the situation stabilises, investors will return and the market will rebound," said another analyst.
Of course, with all the negatives around, it is a normal for the market to react in such a way, he said, blaming the herd mentality for the market's contraction.
The economy was still growing, albeit at a slower pace in the first half last year, but definitely stronger in the second half with implementation of projects under the Economic Transformation Programme, he said.
He expected the KLCI to rebound back to the 1,530-points level by next week unless the situation deteriorates further.
Another analyst with a brokerage company agreed that there will be a technical soon at the 1,531 level.
"Although investors are cutting losses, I don't think the market is badly affected," he said.
He said Asian stock markets have held up better than other markets in the United States and Europe, thanks to the positive economic recovery in the region.
