Regional markets in jitters
The Thai central bank may have to rethink its next course of action. Yesterday the central bank imposed capital controls in a bid to curb speculation on the Thai currency, the Baht. Subsequent to that, its stock market suffered its biggest one day fall since 1990.
Regional bourses were in jitters waiting for its fallout effects on the region.
The Central Bank of Thailand had decided to lock up 30% of new foreign currency deposits on non-trade related for a year to curb speculation.
The Thailand Stock Exchange Index plunged almost 15% to 622.14 while the Thai baht fell 1.78% against the US dollar.
Across the region, the Jakarta Stock Exchange Index fell 2.85% while Singapore’s Straits Times Index lost 2.23% and the Kuala Lumpur Composite Index fell 1.96% to 1,060.36.
On the home front, Datuk Seri Najib Razak assured investors that Malaysia’s fundamentals remained strong while Bank Negara Malaysia said the country would continue to gradually open up its financial markets.
At Bursa, major losers include British American Tobacco (M) Bhd, which fell 75 sen to RM43, IOI Corp Bhd 70 sen to RM17.40, DiGi.Com Bhd 60 sen to RM15.70, and Genting Bhd and Resorts World Bhd 50 sen each to RM31.50 and RM14.20 respectively. Tenaga Nasional Bhd and Batu Kawan Bhd lost 40 sen each to RM10.80 and RM10.70 respectively.
Among those with a 30 sen drop were Malayan Banking Bhd, Kuala Lumpur Kepong Bhd, IJM Corp Bhd and Bumiputra-Commerce Holdings Bhd to RM11.50, RM12.80, RM7 and RM7.45 respectively.
Analysts said the sharp fall on Bursa was a knee-jerk reaction as investors locked in gains although Malaysia’s fundamentals were still intact. They said the KLCI’s strong support was 1,050.
Mayban Securities Research head Vincent Khoo said fund managers were trying to close the books and lock in their profits for the year.
“It is a matter of days before the market recovers, either by the end of this week or next. Investors should buy into weakness as the market is expected to stage a strong recovery,†he said.
SJ Securities Sdn Bhd head of research Cheah King Yong said the Malaysian market has been consolidating for the past few days and was very vulnerable to selling as fund managers locked in gains for payment of dividends.
“They (foreign investors) are wary as to whether other regional markets will follow suit. This capital control was unexpected and investors don’t like uncertainty,†Cheah said.
