Weakening crude prices cause ringgit and share slump

PETALING JAYA: Malaysian shares and the ringgit slid Tuesday in the wake of a fall in US crude prices to below USD40 per barrel.

Cautious sentiment ahead of Bank of England’s policy review outcome this week eased on local stocks while global markets focused on likely steps by major central banks to help cushion the impact of Brexit.

Malaysia’s benchmark FTSE Bursa Malaysia dipped 0.3 per cent to 1,660.23 points. The index has lost 1.9 per cent in 2016 so far, according to a report in Nikkei Asian Review.

The advancers were cigarette maker British American Tobacco Malaysia, Hong Leong Bank and Public Bank.

The major contributors to losses on the KLCI were CIMB Group Holdings, RHB Bank and Sapura Kencana.

The ringgit depreciated 0.2 per cent to 4.03, as did the regional currencies that traded in a wide band of 3.84 to 4.42 against the greenback this year.

The report quoted Sia Ket Ee, an analyst with Hong Leong Investment Bank, as saying: “We reiterate our view that as long as KLCI is unable to close decisively above 1,667 and last month’s high of 1,675 points, extended sideways consolidation is still on the cards.”

The KLCI rose 0.7 per cent Monday to 1,665.23 points, its highest level since July 25.

For the first time since April 20, US crude prices dropped to three-and-a-half month lows Monday, slipping below the psychological USD40 point. Crude prices lost over 20 per cent from their recent high of over USD50 in April, amid concerns of a glut and high crude and refined product inventories.

US crude was last up 0.8 per cent at US40.39 per barrel on Tuesday, after falling 3.7 per cent Monday, while Brent crude was 0.97 per cent higher at USD42.55 per barrel after slipping 0.8 per cent overnight, the report said.

20 of the 30 constituents on KLCI ended easier Tuesday, while 491 declining issues outnumbered 277 advancing ones.

According to Kenanga Research, foreign investors bought RM160.8 million in Malaysian shares on Monday. Foreign inflows in the nation’s equities now stand at RM1.1 billion for 2016 so far.

Due to the overnight slump in crude prices, the nation’s biggest oil and gas services provider SapuraKencana fell 2.1 per cent to RM1.40.

Closing for the first time below RM5 since listing on June 28, the biggest loser on KLCI Tuesday was RHB Bank which fell almost 3 per cent to RM4.94.

Extending Monday’s 1.3 per cent advance, British American Tobacco Malaysia ended 1.1 per cent higher at RM50.56, leading gains on the KLCI. The cigarette maker traded easier over 9 per cent last week after its disappointing quarterly earnings, according to the Nikkei Asian Review.

In the banking sector, Public Bank bucked 0.6 per cent to RM19.80.

Hong Leong Bank appreciated 0.3 per cent to RM13.26, while AMMB Holdings further strengthened Monday’s 2 per cent advance, ending 0.7 per cent higher at RM4.42.