Barefoot Investor: Asian markets slump on US credit outlook cut

KUALA LUMPUR: The FBM KLCI fell sharply below the 1,520-point level in early trade on Tuesday, April 19 in line with key regional markets that were mired in the red following the overnight slump at Wall Street.

The FBM KLCI fell 0.71% or 10.80 points to 1,517.12 at 10am.

Losers beat gainers by 404 to 70, while 151 counters traded unchanged. Volume was 148.70 million shares valued at RM170.93 million.

Asian markets fell on Tuesday after rating agency Standard & Poor's lowered its US credit outlook to negative, prompting a global flight to other assets, according to Reuters.

The euro nursed heavy losses early in Asia while the yen gained across the board as worries about sovereign debt problems in Europe and the United States prompted investors to unwind carry trades, it said.

S&P, which assigns ratings to guide investors on the risks involved in buying debt instruments, said the move signals at least a one-in-three chance that it could eventually cut its long-term AAA rating on the United States within two years, it said.

At the regional markets, Japan’s Nikkei 225 lost 1.49% to 9,413.99, Hong Kong’s Hang Seng Index fell 1.09% to 23,570.82, the Shanghai Composite Index was down 0.99% to 3,026.93, Taiwan’s Taiex fell 1.24% to 8,606.52, South Korea’s Kospi declined 1.03% to 2,115.76 and Singapore’s Straits Times Index shed 0.61% to 3,125.15.

Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi in a note to clients on April 19 said that due to the Dow Jones Industrial Average’s negative tone last night, the FBM KLCI would be in a heavy profit-taking mode today.

A recent secondary high of 1,565.53 (April 4, 2011) had been seen and a major downward retracement phase has now emerged.

“Failure to hold above 1,529.41 last Tuesday implies a very bearish outlook for the FBM KLCI.

“Sell on any and every rebound rally that emerges,” he said.

However, OSK Research’s Shin Kao Jack in a note April 19 said the market’s near-term technical outlook has been straightforward enough for the research house to continue to maintain its bullish view, as long as the benchmark was trading at above the 1,474 point-level.

“Immediate support is still seen at last Wednesday’s low of 1,517 points while the 1,500-pt psychological mark would be the next support.

“To the upside, there is immediate resistance at the 1,544 point-level, followed by the 1,565 point-level and the historic high of 1,577 points,” he said.

On Bursa Malaysia, BAT and DiGi fell 48 sen each to RM47.22 and RM28.52, Panasonic 40 sen to RM23, Hong Leong Bank 20 sen to RM10.30, HLFG 19 sen to RM9.26, Lafarge Malayan Cement 15 sen to RM7.22, MISC 14 sen to RM7.53, Petronas Dagangan and CIMB 12 sen each to RM15.98 and RM8.18, while RHB Capital lost 11 sen to RM8.29.

Smartag was the most actively traded counter with 11.1 million shares done. The stock fell half a sen to 37.5 sen.

Other actives included Key West, Perisai, Tejari, Focus, Karambunai, MAA, HWGB and Ramunia.

Gainers at mid-morning included APM Automotive, Ewein, HELP, LTKM, Texchem, Ken Holdings and Sceintex.(


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