Mixed trading as selling pressure ebbs

Tuesday, 18 August 2009 17:46

Shares on Bursa Malaysia traded mixed on Tuesday, Aug 18. The broader market had more gainers than losers, although the FBM KLCI extended its decline. Still, the extent of losses for the index was comparatively small after Monday’s steep fall, as selling pressure ebbed.

Most Asian markets also closed mixed, showing some stability after Monday’s plunge. Stock markets around the region and the world had plunged on Monday, triggered by a sharp fall in China’s stock market and concerns over the strength of the recovery ahead.

A lower than expected reading on US consumer confidence released last Friday, coupled with data released last week showing weaker than expected July retail sales and weekly jobless claims, had cast doubts on the strength of US consumers to drive the recovery.

Consumer spending accounts for 70% of the US economy, and is the key driver of Asia’s growth engines. Thus, a weak consumer sector, hampered by large existing debts, negative home equity and high unemployment, will likely cause the recovery to be slow. Concerns over looming credit and asset bubbles, and potential credit tightening measures in China are also making their periodic rounds.

As a result, the Chinese stock market has seen periodic one-off large falls in recent weeks as investors turned cautious. The FBM KLCI was in the red the entire day on Tuesday, but losses were limited. The index fell as much as 13 points in the opening minutes, but ended the day down just 4.6 points at 1,164.4.

Market breadth was positive at the close, with advancing stocks outpacing declining ones by a 3-to-2 ratio. Trading volume totaled one billion shares.Trading continued to be dominated by smaller cap and penny stocks stocks. The top actives include KNM, Mulpha, RCE Capital, MRCB, Scomi, LCL and SAAG.

Major gainers include glove makers Adventa and Latexx, and Multi-Purpose Holdings. Losers include KL Kepong, Tanjong plc and IOI Corp.