Bursa Malaysia (KLCI) falls as trading resumes, but well off lows

The KLCI fell sharply on July 4, after a one-day trading suspension on July 3.

Although Wall Street had chalked up overnight gains on Thursday, there was pent-up selling pressure from the opening bell as regional markets had fared badly on Thursday when we were closed. On a positive note, the KLCI closed well off its intra-day lows due to bargain hunting activities in the afternoon session.

The KLCI plunged right from the opening bell, and fell as much as 33.7 points at its intra-day low. Bargain hunting activities in the afternoon session limited its losses to 19.6 points at the close, with the benchmark index ending at 1,134.1.

Market breadth was negative with declining stocks pouncing advancing ones by a 3-to-1 ratio on volume of 594 million shares.

Blue chips bore the brunt of the sell-off and comprised much of the day's most actives list. Actively traded stocks include Resorts, Gamuda, IOI Corp, Bumiputra-Commerce, Sime Darby and AirAsia. Major losers include BAT, Kulim, DiGi, Asiatic and Bursa Malaysia. The day's top gainers were mostly thinly traded or illiquid stocks.

Investors are being troubled by persistent uncertainties, both domestically and globally. Long standing external concerns over the health of the US economy, high crude oil prices and rising inflationary pressures remain. There is no evidence to suggest that prevailing trading conditions are about to change anytime soon.

On Thursday, crude oil prices climbed to a new record high of US$145.85 (RM481.31) per barrel. The European Central Bank raised interest rates by 25 basis points to 4.25%, joining central banks from countries such as Russia, Brazil, Vietnam, the Philippines, Indonesia, China and India that have raised interest rates or instituted credit-tightening measures in the past month.

While the external economic picture has been murky for a while, these problems are being compounded by recent domestic political developments that have created even more uncertainties. The confluence of these factors is likely to keep investors sidelined in the near term, although many stocks are looking attractively priced.