Volatile Klse Caused by Permatang Pauh Elections

25 December, 2017

The Malaysian stock market has been in a rather depressed mode. Internationally, it has been affected by the downturn of the Dow Jones caused by financial fears as the Columbian Bank & Trust Co became the 9th bank to collapse. Locally, the market has been greatly affected by the Permatang Pauh elections happening today which will determine if Datuk Seri Anwar Ibrahim will one day challenge for the Prime Minister’s position.

Perhaps not.

In volatile times such as this when the overall market is down, it is a ripe time for bargain hunting. As the general market sentiment is depressed, blue chip stocks will inevitably be depressed and you might be able to pick them up at a price below their expected value.

However, only do this if you are a long term investor looking to make from dividend and capital appreciation returns over the holding time of your investment. Going in as a speculative investor into a volatile market may work against you as the market volatility may be too rapid for you to make a quick exit.

Nevertheless, like all investments, ensure you know your personal risk levels and do sufficient research on the stocks you are intending to buy. It always pays to be a smart investor!

KUALA LUMPUR: Local stocks fell Tuesday morning alongside regional peers on poor showing on Wall Street overnight. Attention, however, is focused on the Permatang Pauh parliamentary by-election, which kicked off 8am this morning. Polling is to end at 5pm. Results, a barometer of the local political climate, are expected later this evening.

At 10am, the bellwether Kuala Lumpur Composite Index (KLCI) fell 7.62 points to 1,071.11 points. Some 35.97 million shares worth RM68.35 million changed hands in the first hour of trading. Market breadth was negative with the 149 decliners whacking the 37 gainers four-to-one, while 107 others traded unchanged.

The ringgit this morning hit a 10-month low against the greenback, slipping to RM3.3885 to the US dollar at 10.38am after Bank Negara Malaysia yesterday kept overnight policy rates unchanged at 3.5%. Crude oil was at US$115.40 (RM390.06) at 9.38am Kuala Lumpur time on Nymex electronics trading.

Leading declines on the KLCI was IOI Corporation Bhd, which yesterday confirmed news reports that it had won a bid for Menara Citibank without saying how much it is paying. Details will only be released upon sealing of the definitive agreement. IOI Corp fell 20 sen or 4% to RM4.80 with 3.6 million shares done, effectively wiping out its 31 sen gain to RM5.15 last Friday.

Also lower were Bumiputera-Commerce Holdings Bhd (BCHB) and Tenaga Nasional Bhd. BCHB fell 20 sen to RM7.95 with 1.02 million shares done, while Tenaga eased 15 sen to RM8.05 on a volume of 136,500 shares.

Technical analysts, including those at Aseambankers and Hwang-DBS Vickers Research, had predicted weakness in the KLCI today from their reading of the charts.

“As investors are sidelined ahead of today’s by-election in Penang and the massive 241.81-point drop in the Dow Jones Industrial Average, the KLCI is likely to head lower for today. The KLCI’s support levels of 1,064 and 1,049 are weak, while resistance levels of 1,078 and 1,089 will cap any weak rebound that this index can muster,” Aseambankers told clients in a note this morning.

“Following an overnight tumble in Wall Street (2.0%-2.1%), we expect the regional market to return most of their gains yesterday when market opens today. For the day, we expect trading interest in the Malaysian bourse to remain weak with trading volumes hovering around the 300 million shares per day. Our key barometer, KLCI may show a downward bias today with its immediate support level at 1,050 points,” Hwang-DBS Vickers told clients in its note this morning.

Stocks plummeted on Wall Street yesterday, reportedly on renewed concerns on financial stocks after Kansas-based Columbian Bank and Trust Company became the ninth US bank to collapse this year. Also hitting sentiments were declines on American International Group, which tumbled to a 13-year low after a broker said the insurer could lose nearly US$3 billion this quarter on mortgage related write-downs.

Most major regional indices were at least 1% down mid-morning.

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