Malaysian shares down over possible Fed rate hike

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KUALA LUMPUR: Malaysian shares fell for the first time in six sessions Wednesday.

This was largely due to profit taking and tepid regional sentiment after a Federal Reserve official hinted at an earlier-than-expected rate increase, according to a Nikkei Asian Review report.

New York Fed President William Dudley said on Tuesday that a rate hike in September was possible, while Atlanta Fed President Dennis Lockhart said he did not rule out at least one rate hike before year’s end.

The US central bank, which last raised rates in December, is due to meet on Sept 20 and Sept 21 to review policy.

The Nikkei report said global uncertainty stemming from Britain’s decision to leave the European Union and mixed domestic economic data had prompted the Fed’s prolonged pause this year.

Most Southeast Asian markets fell Wednesday, with Philippine’s PSE Composite and Singapore’s Straits Times declining about 0.5 per cent each.

The benchmark FTSE Bursa Malaysia KLCI fell 0.3 per cent to 1,694.32 points. The index had rallied 1.7 per cent in the previous five days and was up 2.5 per cent this month.

The ringgit declined 0.7 per cent to 4.01 against the dollar, as the greenback strengthened amid increased Fed rate hike expectations.

“After testing our 1,700 target yesterday, the KLCI daily and weekly technical indicators have turned increasingly overbought, which could signal potential profit taking correction in the coming days,” the Nikkei report quoted Sia Ket Ee, an analyst with Hong Leong Investment Bank, as saying.

The report said Sia noted key supports at 1,684 and 1,675 levels for the benchmark index.

On the KLCI, 17 of the 30 constituents ended lower Wednesday, while overall declining issues outnumbered advancing ones 517 to 323.

Foreign investors purchased RM97.3 million in Malaysian shares on Tuesday, according to Kenanga Research.

The nation’s biggest oil and gas services provider SapuraKencana fell 1.9 per cent to RM1.56. Hong Leong Financial Group and Malayan Banking slipped 0.7 per cent to RM16.04 and 0.5 per cent to RM8.01 respectively.

British American Tobacco Malaysia fell 3.7 per cent to RM50.1, Axiata Group declined 1.5 per cent to RM5.90, Sime Darby slid 0.6 per cent to RM8.21.

Genting Malaysia led gains on the KLCI, rising 0.5 per cent to RM4.39. Maxis advanced 0.3 per cent to RM19.84.