Written by Chong Jin Hun
Wednesday, 02 September 2009 06:41
KUALA LUMPUR: Investors in key Asian markets including Bursa Malaysia will have to brace for a volatile trading session on Sept 2 with heavy downside bias after Wall Street closed sharply lower overnight.
On Wall Street, US stocks fell for a third straight day on Sept 1, spooked by uncertainty over the health of financials and concerns that the explosive rally since March may have run ahead of economic reality, according to Reuters.
September began living up to its reputation as the worst month for stocks as elevated anxiety pushed the three major indexes down 2 percent for the day, their worst percentage losses since Aug 17.
The Dow Jones industrial average tumbled 185.68 points, or 1.96%, to close at 9,310.60. The Standard & Poor's 500 Index fell 22.58 points, or 2.21%, to 998.04. The Nasdaq Composite Index slid 40.17 points, or 2%, to 1,968.89.
At Bursa Malaysia, the 30-stock FBM KLCI could likely see ivestors taking money off the table. Another factor is that weakness across China markets may weigh on Bursa also.
"Since the local market is overbought, a cautious investment attitude should be adopted. Traditionally, the September-October period is one of a volatile nature (to the downside) for the DJIA.
"Weakness in the Chinese markets could also adversely affect the local market," Maybank Investment Bank Bhd wrote in a note.
Stocks to watch include ENCORP BHD [], OILCORP BHD [], PLANTATION []s, Dreamgate Corp Bhd and MISC BHD [].
Investors may continue to take profit in plantations in anticipation of lower demand for soybean and palm oil in China would drag prices of the commodities down after policymakers there curbed disbursement of new loans.
China is Malaysia's biggest palm oil importer, Malaysian palm oil for November 2009 delivery fell RM67 to RM2303 a tonne yesterday.
New loans in China fell to 355.29 yuan in July this year, significantly lower than the 1.53 trillion yuan a month earlier.
Meanwhile, Datuk Seri Mohd Effendi Norwawi returned to the corporate scene with his appointment as executive chairman of Encorp Bhd on Sept 1.
In Oilcorp, its subsidiary Oilfab Sdn Bhd had clinched an oil and gas suppport services contract from Carigali Hess Operating Company Sdn Bhd. The initial package of the job for Carigali Hess' brownfield retrofit project is estimated at RM36 million.
In Dreamgate, it plans to undertake a private placement of new shares, amounting to 20% of its paid-up. The exercise aims to raise RM32 million to finance the company's capital expenditure, and repay loans.
As for MISC, it finalised the en bloc sale of its " Anggerik Class" vessels comprising four 29,900-deadweight tonne single-hull chemical tankers to three privately-owned foreign companies for US$14 million.
The disposal of the vessels, built between 1989 and 1991, was in line with its asset-management strategy to phase out single-hull units, and maintain a modern fleet of chemical tankers for the firm's chemical business unit.
Shares of MISC fell one sen to RM8.71 on Sept 1, Oilcorp lost 1.5 sen to 37.5 sen, while Dreamgate was unchanged at 18 sen.