Bursa slips on Wall Street, oil price slump

Bursa Malaysia was not spared the fallout from this week’s rout on Wall Street and the slump in crude oil prices, with the FBM KLCI sliding 15.34 points to close at 1,695.37 points today. Most sectoral indices on the local bourse ended in the red today, save those for construction, healthcare, utilities and the ACE Market, and the FBM Fledgling Index.

The selloff on Wall Street has been led by technology stocks, and the New York stock market’s gains for 2018 have been wiped out with the latest plunge on Tuesday.

The Dow Jones Industrial Average and the S&P 500 ended at their weakest since late October on Tuesday, diving 553 points or 2.2 % and 49 points or 1.8 % respectively. The technology-heavy Nasdaq declined 117 points or 1.7 %, the lowest it has hit in seven months.

Energy stocks also took a beating after crude oil prices slumped 6.6%.

Rakuten Trade Sdn Bhd head of research Kenny Yee said that the performance of the local bourse is attributable to developments on Wall Street and the decline in crude oil prices – which will be used as the “relevant excuse” by investors to take profits given the recent climb in stock prices.

Asked if the selling will persist, he said this will depend on Wall Street’s performance.

Yee projects the FBM KLCI to trade around the 1,680 level, which he said is a well-supported position.

He noted that selling could also be induced by the expected dip in third quarter corporate earnings, in which further downgrades on corporate earnings growth are expected.

“We were deep into the tech bubble and now it is bursting. The bubble is not totally without fundamentals but prices rose too much over a long period of time. For the US, it is only starting and for Malaysia the oil price drop marked our peak. We were just trying to recover before the bursting of this bubble hit us,” explained Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew.

“There is no cover currently. All asset classes are being hit. Bonds, stocks, commodities, properties, cryptocurrencies … all are being hit. Even gold is going nowhere,” he said.

Asked if this will continue, Pong noted that the market does look like continuing its bearish streak in all asset classes as the tide of liquidity is flowing out at the moment.

Sapura Energy was the most active counter on Bursa Malaysia yesterday, surging 4.17% to 37.5 sen with 87.49 million shares traded.

Malaysian Pacific Industries was the top loser, falling 4.08% to RM11.74 on volume of 480,600 shares.