Malaysian stock market skids in tandem with regional bourses

June 19, 2018 | By | Reply More

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PETALING JAYA: Malaysian stocks fell for the second day this week as the trade spat between the US and China intensified, pushing the FBM KLCI down by 28.07 points or 1.61% to close at an intraday low of 1,715.36 points today.

Losers outnumbered gainers 673 to 226, with 2.31 billion shares changing hands valued at RM2.66 billion.

Over the past two days, the key index has contracted 46.42 points or 2.6%, wiping off RM37 billion in market capitalisation.

Among the top losers today were banking stocks such as Public Bank, Hong Leong Financial Group and Malayan Banking, which declined 64 sen, 56 sen and 27 sen to RM23.36, RM18.26 and RM9.28, respectively.

Elsewhere in the region, the Chinese stock markets plummeted, with the Shenzhen Composite Index and the Shanghai Composite Index tumbling 5.77% and 3.78% respectively, while in Hong Kong, the Hang Seng Index skidded 2.78%.

On the currency front, the ringgit weakened 0.2% to 4.0010 against the greenback as at 5pm today.

The US dropped another bombshell on Monday, saying it will be pushing ahead with hefty tariffs on China’s goods beginning July 6.

US President Donald Trump said he has asked the US trade representative to identify US$200 billion (RM800 billion) worth of Chinese products that will be subject to additional import tariffs of 10%.

China warned that it would retaliate by imposing duties of the same value on several US commodities, including crude oil.

PublicInvest Research expects the trade tensions between the US and China to continue and to be negative on emerging economies, given the significance of trade to them.

“The spat between these two global giants may ultimately freeze trade momentum and steal some growth away as a result, just when the world’s trade is about to normalise this year after years of sub-par growth, no thanks to anaemic growth in advanced economies,” it said in a research note today.

With no truce in sight, the research house expects emerging economies to take the biggest hit, in particular their currencies, which may experience heightened volatility.

PublicInvest Research said what is more worrying is that the US may use the same tactic with the rest of the countries it has trade imbalances with.

“Hot on the list are Germany, Canada and emerging economies like India and Malaysia. This may lead to a freezing up of global trade, resulting in stalling growth just when the world is about to grow within its potential after so long.”

On the currency front, it expects the ringgit to see some selling pressure in line with bearish sentiment on emerging economy currencies, but selling pressure on the ringgit could be less intense supported by strong fundamentals, namely positive current account surplus and strong economic growth.

“The ringgit will also benefit from much reduced political risks following a smooth transition of power at the Federal level recently.”

PublicInvest Research is maintaining its full-year average of RM4.00 for the ringgit against the US dollar.

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