Asian markets fall as yen rises

Written by Surin Murugiah
Tuesday, 29 September 2009 00:14

KUALA LUMPUR: Asian markets skidded on Sept 28 after Japan’s Nikkei 225 tumbled to its lowest level in two months as the yen appreciated to an eight-month high against the US dollar following reports that Japanese officials did not have any plans to stem the currency’s rise.

The rising yen piled pressure on the export-heavy Japanese stock exchange as a stronger currency makes exports less competitive.

However, the yen lost some ground later in the day as the country’s Finance Minister Hirohisa Fujii toned down his earlier statement on the possibility of a stronger Japanese currency and clarified that his statements were being distorted.

According to a Reuters report, Fujii was reported to have said that the root of the problem of the yen's rise against the US dollar was in the US policy and that markets would correct themselves.

On Sept 28, the yen traded as high as 88.24 per dollar, its highest since January when it spiked to a 13-year high of 87.10.

Apart from the yen worries, the weak US housing data last week did little to restore confidence in the dollar. European markets traded in negative territory on Sept 28 on concerns of weaker-than-expected US economic recovery and commodity prices continued their slide, keeping investors on the sidelines.

Crude palm oil (CPO) futures took a tumble on Sept 28 after Godrej International Ltd’s influential director Dorab Mistry said the price for the commodity should ease to RM1,900 per tonne for demand to rebound. Godrej is one of the biggest buyers of palm oil in India.

CPO for third-month delivery fell RM83 per tonne to RM2,103 on Sept 28.

Meanwhile, crude oil prices slipped as declines in Asian equities sparked worries of a slowdown in the recovery of demand for fuel. Crude oil fell 43 cents per barrel to US$65.59 (RM228.25) as at 6.20pm on Sept 28.

In regional markets, the Nikkei slumped 2.5% to 10,009.52 points; the Shanghai Composite Index lost 2.65% to 2,763.52, Hong Kong’s Hang Seng Index fell 2.07% to 20,588.41, the Singapore Straits Times Index slipped 1.26% to 2,629.25, the South Korean Kospi was down 0.94% to 1,675.55 and Taiwan's Taiex Index gave up 0.83% to 7,284.61.

On the local front, the FBM KLCI fell the most in a single day since Aug 17, losing 0.94% or 11.44 points to 1,205.95.

Turnover was 557.89 million shares valued at RM772.79 million. Losers beat gainers 471 to 181, while 220 counters traded unchanged.

MIDF Research Sdn Bhd head of research Zulkifli Hamzah said the global sentiment towards equity was currently a bit fragile, and Malaysia was no exception.

He said the local market had been partly weighed down by the trend in Wall Street and regional markets.

“After the strong gain in recent months, it is to be expected that the market will take a breather. Such an expectation is so pervasive, globally, that it has become somewhat self-fulfilling.

“Timing-wise, the onset of October is also keeping most investors edgy as it is the month of big market crashes. However, we do not foresee a repetition of last year’s October. Asian markets are still attracting global liquidity,” he said.

Zulkifli said the markets in Asia had been riding on strong macroeconomic numbers, especially on production and exports, adding that the concern now was whether the momentum was sustainable.

He said the market was living up to the old adage of selling on news, and as far as MIDF was concerned, any weakness would be an opportunity to accumulate.

“We don’t expect the 1,000 threshold to be broken because it means a retracement of more than 20%, which is by definition a bear market trend. The consensus appears to be a 5% correction, which is about 1,150,” Zulkifli said.

Maybank Investment Bank Bhd (Maybank IB) said the FBM KLCI could be under selling pressure this week if it rallied.

Resistance areas of 1,217 and 1,248 will cap market gains, while the support areas for the FBM KLCI are located at 1,196 and 1,213, it said.

“The Dow Jones Industrial Average lost about 155 points last week and there could be more weakness in the Asia-Pacific region,” Maybank IB said in a note on Sept 28.

On Bursa Malaysia on Sept 28, PLANTATION [] and finance stocks fell, with KL Kepong Bhd, BURSA MALAYSIA BHD [] and GENTING BHD [] among the major losers.

KL Kepong slumped 20 sen to RM13.78, while Bursa and Genting lost 19 sen each to RM8.08 and RM6.49. LAFARGE MALAYAN CEMENT BHD [] was the top loser, falling 23 sen to RM6.05.

Among plantations, FAR EAST HOLDINGS BHD [] fell 15 sen to RM6.15, IOI CORPORATION BHD [] was down 11 sen to RM5.23, BATU KAWAN BHD [] lost 10 sen to RM9.20 and KULIM (M) BHD [] slipped four sen to RM7.36.

In the finance sector, RHB CAPITAL BHD [] lost 15 sen to RM5.10; PUBLIC BANK BHD [], EON CAPITAL BHD [] and CIMB Group Bhd gave up six sen each to RM10.20, RM5.39 and RM11.10, respectively, while MALAYAN BANKING BHD [] eased three sen to RM6.65.

Other losers included MISC BHD [], S P Setia Bhd, Pos Malaysia Holdings Bhd, PETRONAS DAGANGAN BHD [] and KLCC PROPERTY HOLDINGS BHD [].

Among gainers, SINORA INDUSTRIES BHD [] and LOH & LOH CORPORATION BHD [] added 30 sen each to 91.5 sen and RM4.50; Panasonic Manufacturing Malaysia Bhd rose 18 sen to RM12.70 and ALAM MARITIM RESOURCES BHD [] was up 16 sen to RM1.97.

KNM GROUP BHD [] was the most actively traded counter with 32.54 million shares done. The stock declined 2.5 sen to 76 sen. Other top-volume stocks included SAAG CONSOLIDATED (M) BHD [], AIRASIA BHD [], UEM LAND HOLDINGS BHD [] and OILCORP BHD [].