Wednesday September 12, 2012
M'sian market lower on election talk, global outlook
By FINTAN NG
PETALING JAYA: The local bourse closed lower as continued speculation over the date of the general election and concerns on the global economic outlook cast a shadow on investor sentiment.
The FBM KLCI fell in tandem with markets in the region, with plantation and banking stocks among the top losers. The index shed 1.10% to 1,601.31 at the midday break before regaining some ground in the second session of trade.
European markets opened lower as investors remained cautious ahead of a ruling today by the German federal constitutional court on the proposed European Stability Mechanism, a bailout fund.
JF Apex Securities Bhd deputy managing director Lim Teck Seng told StarBiz that investors were now using any excuse to sell and take profit. “The date of the elections and what may come after is what is driving the performance of the local bourse in recent weeks,” he said.
Lim said besides the election issue, funds were also selling due to worries over the global economic outlook. The country's latest trade and factory output data shows external demand remains tepid amid recession in the eurozone and slower growth in the United States and China.
OSK Research technical analyst Mohammad Ashraf Abu Bakar does not see the FBM KLCI's uptrend being threatened as long as the index does not fall below the 1,600 level.
He said it was still too early to see a downward trend, even if the index did fall below the 1,600 level. “It'll still need a lot of market movement before we see a trend and there may be another decline before the market moves up again,” Mohammad Ashraf pointed out.
However, he said there was a correlation between the market movement now and the market movement two months prior to the last general election held in March 2008.
“What is different this time around is that consumer stocks are driving the market instead of the government-linked ones. It does look like investors are moving towards stocks with fundamentals or defensive stocks,” Mohammad Ashraf said, adding that these stocks would be the ones to support market performance going forward.
Meanwhile, analysts at Alliance Investment Bank Bhd said in a research note that the rebound from the midday low was due to supportive buying when traders realised that they needed to do something to keep the index above the 1,600 psychological level followed by a close above 1,611 support level “in order to avoid panic selling.”
They said haggling in the area of the 1,611 support level could be seen in the next few days while a downside violation of the 1,600 level should see the market moving downward with an eye to test the next downside target at 1,570.