Bursa bleeds another RM31b in global carnage

By Yow Hong Chieh

August 08, 2011

Bursa Malaysia has now lost over RM65 billion in value from a week ago. — Reuters pic

KUALA LUMPUR, Aug 8 — Malaysian stocks continued tumbling today with an estimated RM31 billion in value shed from Bursa Malaysia, as jittery investors spooked by concerns about the global economic outlook continued to dump shares.

After the sustained sell-off today, sparked by concerns over Standard & Poor’s downgrading of the United States’ credit rating and Europe’s persistent debt woes, the KL share market is down an estimated RM65 billion in value from last Monday.

Losers overwhelmed gainers 1,051 to 67 today while the broad-based Emas index shed 2.39 per cent to settle at 10,227.95 — a five-month low.

The benchmark FBMKLCI slipped 1.8 per cent to 1496.99, also a five-month low.

OSK research head Chris Eng said that despite the possibility of a small rebound in coming days, markets were unlikely to climb back up to the levels seen in July and would remain volatile.

“We downgraded the market today thinking that in the mid-term it doesn’t look too good, especially after the S&P (Standard and Poor’s) downgrade (of US long-term credit rating).

“It’s prudent that investors start looking at more (alternative) defensive stocks,” he said, suggesting healthcare, media and some consumer stocks.

Eng added that while markets responded positively around mid-day to news that the European Central Bank (ECB) was buying Italian and Spanish bonds, he did not expect the optimism to last.

“It’s not enough what they’re doing at this point,” he said.

An estimated RM26 billion was wiped off the Kuala Lumpur stock exchange on Friday after investors took their cue from the regional meltdown following last week’s rout on Wall Street, the worst since Lehman Brothers collapsed in 2008.

Other Asian stocks continued to tumble today as S&P’s first-ever downgrade of US long-term credit rating on Friday continued to batter already weak sentiment.

Tokyo’s Nikkei stock average slid 2.2 per cent to 9,097.56 after dropping as low as 9,057.29, while the broader Topix fell 2.3 per cent to 782.86.

Hong Kong’s Hang Seng Index plunged more than four per cent to hit its lowest level in a year, while the Shanghai Composite Index dropped more than three per cent.

Singapore’s benchmark index fell by 3.39 per cent, Indonesia by 1.82 per cent and Thailand by 0.99 per cent.

An estimated US$2.7 trillion (RM8.13 trillion) was wiped off the value of world stocks last week, according to Reuters.