The Malaysian Reserve

KLCI rebounds while Asian markets see sea of red

The central bank’s decision to hold interest rate is also viewed favourably amid downside risks stemming from prolonged weakness in EMs (Pic: TMRpic)

By ALIFAH ZAINUDDIN & SHAZNI ONG / Pic By TMR

The local benchmark index made a turnaround yesterday ending a six-day slump, lifted by positive reactions to the government’s new minimum wage policy and Bank Negara Malaysia’s decision to maintain the Overnight Policy Rate (OPR) at 3.25%.

Business employers and manufacturers were encouraged by the new administration’s plan to increase the minimum wage to RM1,050 per month from RM1,000 which they described as a “reasonable” rate.

The central bank’s decision to hold the interest rate is also viewed favourably amid downside risks stemming from prolonged weakness in emerging markets (EMs). Across Asia, markets were battered amid fears that the contagion in emerging economies will spread to developed markets.

South Africa plunged into recession on Tuesday as the rand joined Indonesia’s rupiah, the Turkish lira and the Argentine peso in sinking to record lows.

This year’s rout in EMs have lasted longer than most had anticipated. The sell-off in stocks have lasted for 222 days and currencies for 155 days, according to Reuters.

US President Donald Trump’s potential announcement of another round of tariff hikes on some US$200 billion (RM829.4 billion) worth of Chinese imports added to the jitters.

While some investors see the EM rout as an opportunity to buy on grounds of stronger fundamentals, others are more cautious as the situation is expected to get worse with the US Federal Reserve rates being a major factor.

The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) edged up slightly by 3.07 points to 1,798.57 against the previous day close of 1,795.5. It opened at 1,795.82 points.

The KLCI move between a high of 1,802.6 and a low of 1,794.79 respectively. A total of 1.98 billion shares valued at RM1.89 billion exchanged hands through the session as losers led gainers 553 to 297.

Among the top decliners were Dutch Lady Milk Industries Bhd, Carlsberg Brewery Malaysia Bhd, Petron Malaysia Refining & Marketing Bhd, Heineken Malaysia Bhd and UMS Holdings Bhd.

Top gainers included British American Tobacco (M) Bhd, Panasonic Manufacturing Malaysia Bhd, Malaysian Pacific Industries Bhd, KESM Industries Bhd and MI Equipment Holdings Bhd.

Asian markets were largely in the red with Japan’s Nikkei 225 down by 92.89 points at 22,487.94, Hong Kong’s Hang Seng Index fell 38.46 points to 3,654.75 and Singapore’s STI declined by 12.46 points to 3,143.82. Korea’s Kospi shed 4.16 points to 2,287.61.

In the US, markets were mixed as the Dow Jones Industrial Average gained 22,51 points to 25,974.99, while the S&P 500 went down by 8.12 points to 2,888.60.