FBM KLCI falls below 1,300 on China concerns

Share prices on Bursa Malaysia continued to fall for the third consecutive day on Monday, March 15 as concerns over credit tightening on China spooked investors.

Selling pressure on the local bourse exacerbated, just a week after the benchmark index had hit two-year highs. This sent the FBM KLCI below the psychologically important 1,300-point mark and will likely keep investors sidelined in the near term, until fresh positive leads emerge.

On Monday, except for a brief positive start, the FBM KLCI was in negative territory throughout the day, ending 11.5 points lower at 1,299.7. With this, the index has given up a total of 28.5 points in the last three trading days.

Market breadth was negative with declining stocks beating advancing ones by a 2-to-1 margin on volume of 765 million shares.

Actively traded stocks include Talam, KNM, Berjaya Corp, Axis, Maybank, Time dotCom and AirAsia. Major gainers include Keck Seng, Supermax, United PLANTATION []s, Eng TECHNOLOGY [], Measat and Allianz. Losers include Litrak, KKB, KL Kepong, Tanjong plc and CIMB.

Investors continue to worry about potential further monetary tightening measures in China, following the recent stronger than expected inflation data released last week. Chinese consumer prices rose 2.7% in February from a year earlier, triggering fears the government would be more aggressive in reigning in credit and raise interest rates.

These concerns caused Chinese shares fall to three-week lows on Monday, triggering falls in Hong Kong and elsewhere in the region. Investor caution was also heightened due to the large number of US economic data due this week, including an FOMC meeting, which will signal the strength of the recovery and influence trading on Wall Street.

In the absence of positive leads, investors are likely to stay cautious.