Profit-taking pulls down regional indices
PETALING JAYA: Investors and traders in the region continued taking profit yesterday, weighed on by inflationary concerns and the ongoing crisis in Egypt.
At home, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) fell below the 1,500 mark, losing 9.47 points or 0.63% to 1,494.52.
The 30-stock gauge has lost a total of 45.07 points, or 2.93%, in the past three days, wiping out all its year-to-date gains.
“The index looks weak in the near term,” an analyst said yesterday.
Its research head Chris Eng said funds were now taking profit, especially since Asian markets including Malaysia had registered healthy gains in 2010.
“A flight of funds from emerging markets back to developed markets where there are still some good growth companies is happening,” Eng told StarBizWeek.
“However, the ample liquidity in the United States and euro region will find its way back to Asia in the mid-term as growth prospects in Asia remain strong, even with interest rates being raised to curb inflation,” he said.
The profit taking this week was exacerbated by economic uncertainties as central banks in the region had to make decisions on whether to raise interest rates in view of inflationary pressures.
China on Tuesday said it would raise rates for the third time since October to tame inflation and rapid growth while the Philippines held rates but said it expected inflation to rise further. South Korea surprised by keeping its rates steady.
“The uncertainties in the tightening of monetary policies in the region will continue to add to the selling pressure for some time,” said the analyst.
Of course, the ongoing protests in Egypt, well into its second week, is not making things easier for the markets, he added.
Egyptian President Hosni Mubarak on Thursday decided to remain in office despite mass protests there.
Mubarak's announcement to relinquish powers but not vacate his position did little to boost markets which were hoping for a direct solution to the crisis in the country.
Key US equity indices ended generally flat following Mubarak's statement.
Meanwhile, in the broader Bursa Malaysia yesterday, 635 counters were down, 206 were up while 271 remained unchanged. A total of 1.68 billion shares worth RM2.41bil were traded.
“Given our view of still decent earnings and growth in 2011, we continue to value the FBM KLCI at 16 times 2011 earnings per share for a fair value of 1,648 points,” OSK Research said.
By YVONNE TAN
yvonne@thestar.com.my
At home, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) fell below the 1,500 mark, losing 9.47 points or 0.63% to 1,494.52.
The 30-stock gauge has lost a total of 45.07 points, or 2.93%, in the past three days, wiping out all its year-to-date gains.
“The index looks weak in the near term,” an analyst said yesterday.However, in a market report yesterday, OSK Research advised clients to buy on weakness sectors such as banking for the “economic growth story” and the construction, oil and gas and property sectors “from the Economic Transformation Programme angle”.
“A flight of funds from emerging markets back to developed markets where there are still some good growth companies is happening,” Eng told StarBizWeek.
“However, the ample liquidity in the United States and euro region will find its way back to Asia in the mid-term as growth prospects in Asia remain strong, even with interest rates being raised to curb inflation,” he said.
The profit taking this week was exacerbated by economic uncertainties as central banks in the region had to make decisions on whether to raise interest rates in view of inflationary pressures.
China on Tuesday said it would raise rates for the third time since October to tame inflation and rapid growth while the Philippines held rates but said it expected inflation to rise further. South Korea surprised by keeping its rates steady.
“The uncertainties in the tightening of monetary policies in the region will continue to add to the selling pressure for some time,” said the analyst.
Of course, the ongoing protests in Egypt, well into its second week, is not making things easier for the markets, he added.
Egyptian President Hosni Mubarak on Thursday decided to remain in office despite mass protests there.
Mubarak's announcement to relinquish powers but not vacate his position did little to boost markets which were hoping for a direct solution to the crisis in the country.
Key US equity indices ended generally flat following Mubarak's statement.
Meanwhile, in the broader Bursa Malaysia yesterday, 635 counters were down, 206 were up while 271 remained unchanged. A total of 1.68 billion shares worth RM2.41bil were traded.
“Given our view of still decent earnings and growth in 2011, we continue to value the FBM KLCI at 16 times 2011 earnings per share for a fair value of 1,648 points,” OSK Research said.
By YVONNE TAN
yvonne@thestar.com.my
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