KLCI slips below 900-psycholgical mark in mid-morning

PETALING JAYA: The Kuala Lumpur Composite Index slipped below the 900-psychological mark Monday morning as investors remained sidelined ahead of the government's announcement of an economic stabilisation plan today. The KLCI last closed below the 900-mark in June 2006.

At 10.05 am, the bellwether KLCI was down 16.81 points or 1.86% to 888.42 points, dragged lower by losses at Sime Darby Bhd and Genting Bhd. Major banking stocks like Public Bank Bhd, Malayan Banking Bhd (Maybank), RHB Capital Bhd, Bumiputra-Commerce Holdings Bhd and AMMB Holdings Bhd were among the top 10 lagging movers of the KLCI.

Deputy Prime Minister Datuk Seri Najib Razak did not mention specific measures last Tuesday when he announced plans to unveil the stabilization plan today. This morning, Najib, who is also Finance Minister, said the government will pump an additional RM5 billion of funds into ValueCap Sdn Bhd to double the latter's funds to RM10 billion. ValueCap was set up by the government in 2003 to invest in undervalued companies.

Speaking at the Khazanah Megatrends Forum 2008 in Kuala Lumpur, Najib also said Foreign Investment Committee (FIC) rules will be reviewed to make it more attractive for foreigners to pour in funds, especially in property and commercial sectors. He also said Malaysia's economic growth prediction for 2009 of 5.4% would be revised downwards due to worsening external developments.

Market breadth was negative with 297 declining stocks outnumbering 51 gainers almost six-to-one, while 107 others traded unchanged. Only 96.25 million shares worth RM133.7 million had changed hands one hour into trade.

Chartists, including those at Hwang-DBS Vickers Research, had predicted that the KLCI might fall through the psychological level of 900 today "to test its immediate support line of 890 points".

"And if the selling momentum persists, as stated last week, a key support line for the KLCI is set at 860 points. Based on the market insights last week, counters that look vulnerable to be sold down further include mid- and large-cap companies with high foreign shareholdings and those share prices that have fallen relatively less than the rest so far," Hwang-DBS said in a note this morning.

KNM Group Bhd continued to top the most active list. The stock was down 1.5 sen to 60 sen with 14.7 million shares done, while Gamuda fell 12 sen to RM1.42 with 7.07 million shares done.

Major regional markets were mixed mid-morning. The Nikkei 225, Hong Kong's Hang Seng Index, Singapore's Straits Times Index, Australia's ASX 200 Index and the New Zealand NZX 50 FF Gross Index were showing some gains. However, the Shanghai Stock Exchange Composite Index, Taiwan's Taiex Index and South Korea's Kospi Index were in the red.