KLCI falls 29% in first nine months

PETALING JAYA: The local stock market almost ended the first nine months with a spectacular drop yesterday but closed off the lows of the morning session.

The day before, the Dow Jones Industrial Average (DJIA) fell 7%, the biggest single day drop since Oct 19, 1987 when the index plunged 22%.

The drop yesterday erased US$1.3 trillion from the US stock market, almost double the bungled bailout package of US$700bil.

Over here, the KL Composite Index (CI) fell 29% in the first nine months this year.

Total market value fell by RM286bil from RM1.06 trillion in January to RM771bil on Sept 29, according to EquitiesTracker.com.

Top gainers for the nine months to Sept 30 were companies that received proposals of general offers (GOs) or other privatisation routes.

That showed prices were depressed unless there was a GO and many major shareholders took advantage of cheap share prices to take their companies private.

These stocks include Putrajaya Perdana Bhd, Loh & Loh Corp Bhd, PacificMas Bhd, Sindora Bhd, VADS Bhd, UBG Bhd, Ramunia Holdings Bhd, Ye Chiu Metal Smelting Bhd, Saujana Consolidated Bhd and Pharmaniaga Bhd. Ramunia was also the top gainer for the second board.

The plantation sector provided most of the stocks that were top losers ranked by price. These include Kuala Lumpur Kepong Bhd and Sime Darby Bhd, both of which fell heavily in terms of both price and percentage.

Two of the largest construction stocks - Gamuda Bhd and IJM Corp Bhd - were among the top losers.

The Mesdaq market was the worst performer during this period, with only 11 gainers out of a total 136 stocks listed, with many of these stocks losing 50% or more of their value.

Meanwhile, K.M Lee reports that the local market took a turn for the worse in the wake of fresh selling pressure yesterday. It had earlier rebounded some 77.56 points from the recent low of 963.29 on Sept 18 to a high of 1,040.85 on Sept 22 and spending the subsequent five trading days undergoing a constructive consolidation below the short-term 14-day simple moving average (SMA).

Market sentiment was decisively frail in early deals, with the bellwether CI gaping down 24.6 points, or 2.4% at 995.12 at the opening bell, as investors reacted negatively to a huge sell-off in overnight Wall Street.

The US market was spooked by an unexpected US House of Representatives’ rejection of a US$700bil bailout plan for troubled banks.

Fortunately, the local bourse was able to arrive at a calm shortly and later pared losses significantly to settle a shade below the flat line, ending 1.04 points lower at 1,018.68.

This was due to institutional investors indulging in “deep sea” fishing and perhaps, third quarter “window dressing” activity and short-covering action.

Despite that, Bursa Malaysia still is at risk of re-testing the recent bottom of 963.29 going forward, due to prevailing external uncertainty and the deteriorating technical reading of the daily, weekly as well as the monthly moving average convergence/divergence indicators.

At best, Bursa Malaysia may fluctuate within a moderate band in the intermediate term and investors are advised to trade cautiously as we enter October, the most difficult month for stock trading going by past records.

As for the downside, a clear violation of the crucial support floor may trigger a fresh bout of liquidation action in the market, tearing the key index to the 920.92 points level, which is the 61.8% Fibonacci retracement of the previous massive rally.

To the upside, the CI will encounter a strong challenge at the 14-day SMA and 21-day SMA, now resting at 1,022 points and 1,040 points respectively, and still falling.

No comments:

Pages