21-May-2008 : Profit taking drags KLCI lower at 20-05-2008 (TUE)

KUALA LUMPUR: The KL Composite Index opened in fairly neutral position Tuesday after the long weekend. It treaded water for most of the morning session before investor sentiment turned sharply weaker after the break. The intensified selling pressure mirrored sentiment in key Asian markets.

Wall Street's mixed close overnight initially offered little fresh leads for investors. But a renewed surge in crude oil prices again ignited inflation fears. That prompted some profit taking across stock markets in the region, which had chalked up a string of gains in the previous week.

The seemingly unstoppable rise in oil prices is creating inflationary pressures in the global economy, and is partly to blame for soaring food prices. Crude oil futures traded on the New York Mercantile Exchange rallied above the US$127 per barrel mark, driven by supply disruption concerns. There is also little indication that the Organisation of the Petroleum Exporting Countries (Opec) is inclined to raise production during its next meeting in September. The cartel's reluctance stems from its belief that rising oil prices is due more to speculative activities and weakness in the US dollar than an actual supply shortage.

The KLCI fell by as much as 16 points during the day before recovering some to finish 13 points lower at 1,287.4 points. Market breadth was well in the red. At the close, the number of losing stocks outpaced gaining ones by roughly seven to two.

BAT was the day's biggest loser. The stock ended RM1 lower at RM42.50. Other big losers include Tanjong plc, IOI Properties, AEON, Bumiputra Commerce, United Plantations, CIMA and Green Packet. However, the volume traded on these stocks was relatively low. At the other end, plantation stocks KL Kepong, Batu Kawan and PPB were among the big gainers for the day.

Market volume came up to nearly 652 million shares. Resorts World was the most heavily traded stock Tuesday. Other actives were IOI Corp, Gamuda, Maybank, Time Engineering, MRCB and Telekom Malaysia.