Stock market dips as Bursa implements new board format

Published: 2009/08/04

THE Malaysian stock market fell 0.3 per cent on the first day when two of its boards were combined, as some investors took the chance to pocket profits after a market rally in July.The benchmark index FTSE Bursa Malaysia (FBM) KLCI rose 9.3 per cent, or almost 100 points in July, its steepest monthly increase since April.

“We expect the market to be traded sideways this week ...there will be ups and downs, but generally, the pattern is set for a gentle consolidation period this week,” said Jupiter Securities Sdn Bhd head of research Pong Teng Siew.The benchmark index fell by 3.59 points to 1171.31 yesterday, while most bourses in the region traded higher.

Stock markets in Hong Kong, South Korea, Singapore, Jakarta, New Zealand, Vietnam, Australia and the Philippines closed between 0.25 per cent and 1.31 per cent higher.The Nikkei 225 and the Taiwan Weighted Index were among the few indices in the region that closed lower.

Besides the merging of the main board with the second board, yesterday was also the debut of the FBM ACE index, the benchmark for the ACE Market, which was known as Mesdaq before.The ACE Market is a junior market for emerging companies from all sectors and not just from the technology sector, which was the focus of Mesdaq.

The FBM ACE index rose 8.25 points to 4266.96 on its debut.Overall, analysts remained cautious about the outlook of the local stock market.OSK Research, in a report, said the Malaysian stocks face the risk of an “Edwardian Summer” that may end with a “crash” as shares become expensive.“As with any Edwardian Summer, the longer it lasts, the more out of touch it gets with its fundamentals, and the greater the crash at the end .

The market is definitely overvalued,” said OSK, which selected Malaysian Resources Corp Bhd and Top Glove among its top five picks.The Edwardian era — during the reign of King Edward VII from 1901 to 1910 — was regarded as a romantic golden age of long summer afternoons, garden parties and big hats just before the First World War.

On the overall reaction on the debut of the Main Market and the ACE Market, dealers felt that it was a “business as usual” day.However, a small number of retail investors were confused.“There were some confusion among a small group of retail investors who traded online, as they did not install or download the necessary updates for their Internet trading portals,” said one of the dealers.