BURSA KL ON 17 SEPTEMBER 2008

17-09-2008: KLCI touches year-low of 1,008.13pts
by Doreen Leong
THE EDGE

KUALA LUMPUR: The Kuala Lumpur Composite Index (KLCI) closed 1.87% or 19.26 points lower at 1,012.37 yesterday, dragged by selected blue-chip and plantation stocks, in line with the fall in regional markets following the Wall Street shakeup on Monday.

The KLCI had sagged to a year-low of 1,008.13 points in early trade before recouping some of the losses in the afternoon session.

An SJ Securites chartist expected the local benchmark index to trade between 1,026 and 1,054 points this week.

Regionally, Singapore’s Straits Times Index fell 1.01% to 2,461.43 points while Hong Kong’s Hang Seng Index dropped 5.44% to 18,300 points and Japan’s Nikkei 225 declined 4.95% to 11,609.72 points.

Trade on Bursa remained thin with only 389.66 million shares worth RM768.44 million done.

Plantation index fell 160.56 points to 4,753.35. November crude palm oil futures declined RM137 to RM2,103 per tonne.

Leading the decliners, Kuala Lumpur Kepong Bhd fell 40 sen to RM9.90, IOI Corp Bhd lost 20 sen to RM4.04, and Kulim Malaysia Bhd warrants shed 28 sen to RM3.12.

Analysts have lowered their projections on CPO price outlook for the next three years on the back of anticipated higher production and lower projected demand growth for soybeans in major consuming countries.

However, the extent of the price cut was limited by crude oil price assumptions of US$113 (RM392.11) per barrel over the next two years.

The turmoil on Wall Street sent oil prices sharply below US$100 per barrel for the first time since March. The Nymex crude oil was trading at a year-low of US$91.74, but recovered slightly to US$92.81 at the market close yesterday, down US$2.90 from Monday’s close.

Despite the selldown on the local bourse, analysts believed some stocks presented good trading opportunities as they are supported by strong fundamentals with attractive valuations.

Among their top picks are Malayan Banking Bhd (Maybank), BCHB, Tenaga Nasional Bhd and Genting Bhd.

Banking group Maybank was among the top loser yesterday, shedding 45 sen to RM7.40 on news that the bank would most likely abandon its proposed RM8.6 billion acquisition of PT Bank Internasional Indonesia after the Indonesian regulator rejected its appeal to be exempted from a new regulation there. Meanwhile, Bumiputra-Commerce Holdings Bhd declined 30 sen to RM7.85.

KNM Group Bhd continued to be actively traded with 27.78 million shares changing hands. The oil and gas counter closed at RM1.15 yesterday. Tenaga lost 40 sen to RM6.50 with 16.5 million shares done.

Among the top gainers were DiGi.com Bhd and office equipment and office furniture maker AHB Holdings Bhd. DiGi gained 30 sen to RM23.80 while AHB added 23 sen to 30 sen on razor-thin volume.

The ringgit rebounded from near the lowest in a year after Lehman Brothers filed for the biggest bankruptcy in history. The local currency gained against the US dollar, trading at 3.4560 at market close yesterday, on speculation that investors were expected to shun the greenback amid heightened speculation that the Federal Reserve will cut interest rates yesterday.

Meanwhile, Bank of China cut interest rates yesterday to 7.2% from 7.47%, its first cut in six years, to help sustain economic growth. The yuan climbed 0.18% to 6.8324 against the US dollar yesterday afternoon.

Bank of China also said it will cut the reserve requirement ratio for smaller financial institutions from Sept 25.

However, it left the deposit rate unchanged, raising concerns that the spread between the deposit rate and lending interest rate may erode banks’ profit margins.