Local stocks, ringgit dip in wake of fraud report

PETALING JAYA: Bursa Malaysia's FBM KLCI and the ringgit traded slightly lower yesterday after a news report alleged that entrepreneur Jho Low and PetroSaudi International had defrauded the Malaysian government of US$1.83 billion in cash and US$400 million in paper profit with the help of 1Malaysia Development Bhd executives.

The local stock market's benchmark index lost 2.6 points or 0.15% and closed at 1,724.13 points yesterday, its first day of trading after the Hari Raya Aidilfitri break.

Despite closing 0.53 point lower at 1,726.13 before the festive break last Thursday, the FBM KLCI yesterday opened on a positive note as some participants chose to play on the buying side in anticipation of a higher market. The benchmark index subsequently traded to a high of 1,735.75.

“However, the absence of followthrough buying in the area of 1,735.75 prompted profit-taking activity to kick in. This pushed the benchmark index down to 1,720.02 before it settled off the day’s low at 1,724.13,” said AllianceDBS Research said in report yesterday.

In the broader market, AllianceDBS Research said, gainers outnumbered losers with 452 stocks ending higher and 319 stocks finishing lower. “That gave a market breadth of 1.41 indicating the bulls were in control,” it said.

Major advancers among the FBM KLCI component stocks included Hong Leong Bank Bhd, Petronas Gas Bhd, and CIMB Holdings Bhd. Major stock decliners included MISC Bhd, Astro Holdings Bhd and Tenaga Nasional Bhd. Total market value traded yesterday was RM1.55 billion.

Following the close near the day’s low yesterday, AllianceDBS said, the market is expected to move between 1,720 and 1,735 in the coming few days.

“A rise above 1,735 should see an attempt to test the next hurdle at 1,739. Conversely, a fall below 1,720 would put pressure on the market down to the subsequent support at 1,706. Indicator wise, the Moving Average Convergence Divergence is still above the nine-day moving average line,” it said.

“The analysis of overall market action (yesterday) revealed that buying power was weaker than selling pressure.”

On the currency front, the ringgit weakened to 3.8095 against the US dollar yesterday.

Reuters reported that most emerging Asian currencies skidded as strong US consumer inflation and housing data added to expectations that the Federal Reserve will raise interest rates in the coming months. Most investors are anticipating the US regulator to start raising rates later this year which has helped to strengthen the greenback.