BURSA MALAYSIA FALLS 3.18pc; GLOBAL MARKETS POST SHARP DROPS TOO

Italian political turmoil, internal factors drag down local bourse, say analysts

ALMOST all of Bursa Malaysia’s key indexlinked stocks ended in the red yesterday as the broader market slumped 3.18 per cent, the largest one-day decline since the global financial crisis in 2008.

Severe selling pressure and global risks resulted in the FTSE Bursa Malaysia KLCI (FBM KLCI) becoming the worst-performing index among major markets in the world.

Analysts said external factors, especially the Italian political turmoil, and internal risks had dragged the stock market down.

The FBM KLCI opened higher at 1,793.54 points yesterday but lost its momentum and fell to an intra-day low of 1,710.08 points, or 3.7 per cent, at 3.22pm, a level not seen since early last year.

It settled 56.56 points lower at 1,719.28 at the close of the session. The key index’s last largest decline was on March 10 2008, where it lost 123.11 points, or 9.5 per cent.

Twenty-nine of the 30 FBM KLCI component stocks saw losses at the close.

YTL Corp Bhd led the decline with 8.82 per cent, followed by MISC Bhd (7.6 per cent) and Astro Malaysia Holdings Bhd (7.48 per cent).

Petronas Dagangan Bhd was the only stock that gained, increasing 0.32 per cent to end at RM24.90.

Stock market analyst Nazarry Rosli said the Italian political crisis had caused almost all stock markets to fall globally.

Bursa Malaysia was the worsthit as it was affected by the market sentiment associated with high-impact projects such as the Kuala Lumpur-Singapore highspeed rail and the Mass Transit Line 3 project, he added.

“After high-impact projects were cancelled, sentiment got affected as profits of some of the major stocks linked to those projects have been taken into account in the earnings estimates.”

He said the government’s decision to replace the Goods and Services Tax with Sales and Services Tax had also raised investor concerns as it would affect certain companies’ earnings.

“Investors are taking a waitand-see approach as these uncertainties are expected to last about two to three months.”

Maybank Investment Bank Bhd dealer Jeffry Azizi Jaafar said Italy’s financial markets were affected on the possibility of snap elections.

“The uncertainty has caused the euro to fall to its lowest level in 10 months against the US dollar. This caused investors to switch to safe assets such as United States Treasury bonds.”