RTTNews - The losing streak has hit three sessions for the Malaysian stock market, which has shed more than 14 points or 1.3 percent in the process. The Kuala Lumpur Composite Index fell through support at 1,070 points, and now investors are expecting to see the market ease a bit further by the opening of trade on Tuesday.
The global forecast for the Asian markets is effectively flat with a touch of downside, ahead of the start of earnings season later this week. Technology shares and commodities are expected to see selling pressure, offsetting projected strength among the properties and chemical stocks. The European markets ended sharply lower, while the U.S. bourses finished in mixed fashion but near the unchanged line - and the Asian markets are predicted to follow the latter lead.
The KLCI finished modestly lower on Monday, thanks to slight declines among the financial stocks and industrial issues, along with more substantial gains among the plantations.
For the day, the index was off 6.86 points or 0.64 percent to close at 1,065.83 after trading between 1,062.65 and 1,072.69. Volume was 762.605 million shares worth 844.032 million ringgit. There were 436 decliners and 157 gainers, with 174 stocks finishing unchanged.
Among the decliners, KNM Group, Time Engineering, Talam Corp, UEM Land, Sime Darby, Maybank, Tenaga Nasional and IOI Corp all finished in negative territory.
Wall Street offers a mixed lead as stocks were able to shed most of their losses in late trading on Monday after a sharp move to the downside in early going. While the Dow and S&P 500 finished modestly higher, the tech-heavy NASDAQ closed on the downside.
On the economic front, traders largely shrugged off a report from the Institute for Supply Management showing that activity in the service sector contracted for the ninth consecutive month in June, although at a slower pace than economists had been expecting. The ISM said its index of activity in the service sector rose to 47.0 in June from 44.0 in May, but a reading below 50 indicates a contraction. Economists had been expecting the index to come in at 46.0.
On the corporate front, food and beverage giant PepsiCo Inc. (PEP), together with its bottling partner Pepsi Bottling Group Inc. (PBG), announced plans to invest $1 billion in Russia over three years. Meanwhile, EMC (EMC) raised its all-cash offer to acquire Data Domain (DDUP) to $33.50 per share for a total enterprise value of about $2.1 billion. EMC is competing with NetApp (NTAP) to acquire Data Domain.
Despite the major indices all moving higher going into the close, the NASDAQ was unable to break into positive territory. Subsequently, the NASDAQ finished down by 9.12 points or 0.5 percent at 1,787.40, while the Dow closed up by 44.13 points or 0.5 percent at 8,324.87 and the S&P 500 rose by 2.30 or 0.3 percent to 898.72.
In economic news, Moody's Investors Service said on Monday that the Malaysian government's intensification of its recent structural reforms supports the stable outlook on the A3 sovereign rating.
Anand Mitra, lead sovereign analyst for Malaysia said the conclusion was based on the observation that recently announced reforms would result in a significant dilution of the nation's 38-year-old 'New Economic Policy' and will also advance the investment liberalization agenda further than anything attempted in recent years.
Although specific fiscal strategies and policy reforms to limit and reverse the growing overhang in government debt are still being formulated, the Najib administration's unfolding structural reform program is timely, Mitra said.
The analyst said if the reforms are implemented effectively alongside fiscal policy adjustments, they could re-shape the country's medium-term competitiveness, growth potential and the overall sovereign creditworthiness.
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