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Malaysia Stock Market May Extend Losing Streak

11/7/2012 7:00 PM ET

The Malaysia stock market gave up less than a point on Wednesday, but that was enough to extend its losing streak to four sessions, costing it almost 30 points or 1.8 percent in that span. The Kuala Lumpur Composite Index ended just above the 1,645-point plateau, and now analysts are forecasting further damage at the opening of trade on Thursday.

The global forecast for the Asian markets is negative on renewed concerns about the deficit woes in the United States and weakening economic activity in Europe. Selling pressure may follow the news that President Barack Obama won re-election in the U.S., defeating Republican challenger Mitt Romney. Adding to the cautious sentiment, European Central Bank President Mario Draghi said that European economic activity is expected to remain weak in the near term. The European and U.S. markets were firmly in the red and the Asian bourses are tipped to follow that lead.

The KLCI finished flat on Wednesday as losses from the plantation stocks and industrial issues were mitigated by support from the financial sector.

For the day, the index eased 0.10 points or 0.01 percent to finish at 1,645.53 after trading between 1,643.29 and 1,649.94. Volume was 1.207 billion shares worth 1.709 billion ringgit. There were 367 decliners and 310 gainers, with 351 stocks finishing unchanged.

Among the actives, Hong Leong Bank climbed 1.66 percent, while CIMB Group added 0.26 percent, Public Bank jumped 1.17 percent, Maybank was up 0.11 percent, Axiata plunged 3.16 percent, Telekom Malaysia plummeted 1.58 percent, Kuala Lumpur Kepong shed 0.10 percent and Digi.com dipped 1.38 percent.

The lead from Wall Street is broadly negative as stocks moved sharply lower on Wednesday after ending the two previous sessions mostly higher, as focus quickly shifted to the looming fiscal cliff and the possibility of higher taxes following President Obama's re-election.

With the steep losses, the major averages all ended the session at their worst closing levels in three months. Obama's definitive victory helped to eliminate some uncertainty, but traders continued to worry about the upcoming fiscal cliff, which could inflict higher taxes and significant spending cuts.

Credit ratings agency Fitch Ratings said failure to avoid the fiscal cliff and raise the debt ceiling in a timely manner as well as secure an agreement on credible deficit reduction would likely result in a rating downgrade for the U.S. in 2013.

Lingering concerns about the financial situation in Europe also weighed on the markets, with European Central Bank President Mario Draghi saying European economic activity is weak and is expected to remain weak in the near term.

In a speech in Frankfurt, Draghi also said the latest data suggest that the problems in the eurozone are now starting to affect the German economy, which had previously been insulated from some of the difficulties.

The major U.S. averages finished sharply lower on Wednesday as the Dow plummeted 312.95 points or 2.4 percent to finish at 12,932.73, while the NASDAQ tumbled 74.64 points or 2.5 percent to end at 2,937.29 and the S&P 500 plunged 33.86 points or 2.4 percent to close at 1,394.53.

In economic news, Malaysia will on Thursday see September figures for industrial and manufacturing production. Industrial production is expected to fall 0.7 percent on year after dipping 0.1 percent on month and 0.7 percent on year in August. Manufacturing production shed 3.1 percent on month and 1.8 percent on year in the previous month.

by RTT Staff Writer

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