Poorer economic sentiments hurt regional sentiments

KUALA LUMPUR: Anticipation of global economies sinking deeper into recession triggered a sell-off across Asian stockmarkets at midday, dragging the Malaysian equity benchmark down by about 1%.

News on New Zealand's economic contraction for the third consecutive quarter, and a less-than-expected interest rate cut in China did not augur well for global stockmarkets which have fallen substantially so far this year.

Investors could also have reacted to a poorer showing across Wall Street a day earlier on concerns about fourth quarter corporate earnings, lower crude oil prices, and health of the auto sector in the world's largest economy.

In Malaysia, the Kuala Lumpur Composite Index (KLCI), according to analysts, may see limited gains this week due to the year-end holidays in conjunction with Christmas which falls on Thursday.

"We do not discount the fact that the gains on the KLCI will be limited this week due to the upcoming long holiday this Thursday. The overnight performance on Wall Street along with the other regional bourses will continue to dictate the KLCI’s immediate term direction," MIMB Investment Bank Bhd wrote in a note today (Dec 23)

HLG Securities Sdn Bhd commented: "A downbeat overnight economic indicator from major economies continues to hurt sentiment."

New Zealand's gross domestic product fell 0.4% in the third quarter to September. In China, policymakers slashed interest rates further by 0.27% against market expectations of a 0.54% cut.

At 12.30pm, the KLCI fell 0.89% or 7.8 points to 865.63. Prime movers of the 100-company benchmark include shares of plantation counters Sime Darby Bhd which fell 15 sen to RM5.35, and IOI Corp Bhd which declined 12 sen to RM3.52. On the whole, Bursa Malaysia saw a total of 157.77 million shares worth RM125.61 million changing hands, resulting in 274 decliners versus 87 gainers

Most Asian stock indices fell at about noon. Heavy decliners include China's Shenzen SE Composite which tumbled 3.38% or 21 points to 600.8, followed by Taiwan's Taiex which retreated 3.34% or 151.59 points to 4383.95. Meanwhile, South Korea's Kospi gave up 3.11% or 36.71 points to 1142.9 while Hong Kong's Hang Seng was down 2.48% or 362.44 points to 14,259.95. Markets in Japan are closed for public holiday.

All three US indices tumbled in overnight trade. The Dow Jones Industrial Average dipped 59.42 pts or 0.69% to 8,519.69, Nasdaq retreated 31.97 pts or 2.04% to 1,532.35 while S&P 500 was down 16.25 pts or 1.83% to 871.63.

The Edge Daily- by Chong Jin Hun