Business

Wednesday April 29, 2009

Asian bourses extend losses on greater flu fears

By YVONNE TAN


PETALING JAYA: Markets across Asia extended their losses yesterday on heightened fears that the swine flu virus would lead to a deadly global outbreak and dash any hopes of a quicker world economic recovery.

Swine flu was not the only factor that aggravated investors, analysts said, as they were also uncomfortable about the preliminary results of the US government’s stress test to gauge the health of the nation’s 19 biggest banks.

Although the reports are due to be made public on May 4, the Bank of America and Citigroup have been told by regulators that they would probably need to raise more capital in the form of billions of dollars, raising concerns on the state of the financial sector there.

Pong Teng Siew

The KL Composite Index (KLCI) closed down 14.42 points, or 1.47%, to 965.70, its second consecutive day of loss. “The correction is healthy,” Jupiter Securities head of research Pong Teng Siew said.

Market turnover stood at 1.56 billion shares in trades worth RM1.3bil.

European markets also opened lower by an average 2% each in early trade.

On Bursa Malaysia yesterday, losers outnumbered gainers 558 to 135 as investors chose to pocket gains ahead of more uncertainties.

Top Glove Corp Bhd, the world’s largest glove producer, fell 15 sen to RM6 after jumping 65 sen a day earlier on anticipation that orders would accelerate with the flu outbreak.

Tourism-related stock Genting Bhd was the day’s top loser, shedding 26 sen to RM4.34 on concerns that the flu outbreak would hurt demand for its products.

Airlines stocks AirAsia Bhd and Malaysia Airlines were also down by 0.9% and 1.3% to RM1.13 and RM2.98 respectively, an extension of Monday’s slump as investors remained cautious on the demand for air travel.

Analysts said the correction was healthy as the KLCI had been on an uptrend for more than a month before this week, advancing a total of 154.88 points, or 18.5%, from its recent bottom of 836.51 on March 12.

Jupiter’s Pong expects the correction to stretch for one or two months, with small recoveries in between. “It could be ready for a second upswing, perhaps in the second half of the year, when domestic liquidity is accompanied by a possible influx of foreign inflow, which is necessary to sustain a market rally,” he said.

The fresh injection of foreign funds should be apparent during the period as the more developed economies were expected to see some kind of stabilisation by then, Pong added.

MIDF head of research Zulkifli Hamzah offered a differing view saying that Bursa was heading into the weak half of the 12-month cycle. “The May-to-September period has historically been a weak phase,” he said.

Elsewhere, key Asian markets also finished the day lower with Japan’s Nikkei 225 falling 2.67%, Hong Kong’s Hang Seng shedding 1.92% and Singapore’s Straits Times Index ending the day 0.69% lower.

In the currency market, the ringgit weakened the most in three weeks on speculation that the swine flu would prolong the global recession which would hurt demand for the ringgit, an emerging market asset.

At 5pm, the local unit declined against the US dollar at 3.6270/6320. Crude palm oil also fell RM25 to RM2,456 per tonne.


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