KLSE >>> Marginally lower despite Wall Street’s plunge 21 April 2009

Regional stock markets fell on April 21, in reaction to Wall Street’s overnight plunge as investor optimism gave way to profit-taking and risk-aversion due to renewed concerns over the US financial sector – after six weeks of very spectacular gains.

The Dow Jones Industrial Average index fell 3.6% on April 20, its largest percentage decline since March 5, led by financial stocks. Higher bad loans at Bank of America revived fears about the health of the US financial system and the sustainability of the recent spate of better than expected bank results.

The recent spate of strong bank earnings – as well as a rash of better than expected Feb 2009 economic data – had resulted in a six-week rally on Wall Street.

However, economic data for March were decidedly more mixed, and most non-bank corporate earnings in the US have been less inspiring, underscoring the difficult operating environment.

To be fair, global stock markets have rallied very strongly over the past six weeks. Thus, intermittent profit-taking activities are inevitable – even if most opine that the worst for the global economy is behind us. The KLCI, for instance, has risen some 122 points in the last five weeks alone – thus, some profit-taking can also be expected.

Malaysia’s stock market could not escape the regional downdraft, but fared a lot better than the rest with only marginal losses.

The KLCI opened about eight points lower, but slowly pared most of its losses to close only 1.77 points down at 966.6. Market breadth was slightly negative, with declining stocks beating advancing ones by a 6-to-5 ratio on relatively high volume of 1.07 billion shares.

Actively traded stocks include Talam, KNM, PDZ, UEM Land, Axiata, DRB-Hicom and Zelan. Major gainers include Golden Plus, Proton, MMC Corp and Shell. Losers include Nestle, Petronas Dagangan and Bursa Malaysia.