Reuters: Hot Stocks: Malaysian stocks set for worst drop in 16 months on election jitters

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Malaysian stocks set for worst drop in 16 months on election jitters Jan 21st 2013, 05:45 KUALA LUMPUR | Mon Jan 21, 2013 12:45am EST KUALA LUMPUR Jan 21 (Reuters) - Malaysia's benchmark stock index fell more than 2 percent on Monday and appeared headed for its worst single-day drop in more than 16 months as worries over the country's upcoming election sparked selling across the board. The FBI KLCI was down as much as 2.3 percent at 1,638.27 points by early afternoon, its biggest one-session loss since falling 2.5 percent on Sept. 26, 2011, and bucking slight gains in other Southeast Asian stock markets. A steady drip of headlines in local media about the election and speculation of a poll date late in March is fuelling the selling, said Kaladher Govindan, head of research at TA Securities, a local brokerage. The election must be called by the end of April. "Some stocks which were overvalued are down, also some government-linked stocks," he added. Intense speculation about the election date and the slight possibility that the long-ruling Barisan Nasional government may be unseated is leading some investors to take profits on recent gains, analysts said. "It's just the rumours. People are worried about the elections. That's the trigger," said an analyst at a local investment bank who declined to be identified. Among the biggest losers were mobile phone operator Axiata Group Bhd, which fell 6.5 percent to 6.21 ringgit and bank CIMB Group Bhd, which dived 5.0 percent to 7.20 ringgit. UEM Land Holdings Berhad was 4.8 percent lower at 2.18 ringgit. So far this year, the Kuala Lumpur index has fallen around 3 percent, underperforming its Southeast Asian peers. Its 14-day relative strength index is at 33.198, among the lowest in the region. A level of 30 or lower indicates a market is oversold. One Kuala Lumpur-based equities trader said that foreigners were trimming positions ahead of the polls, adding that the election was likely to overshadow the market for the first half of this year. "Telecoms were among best performers last year, so they are selling targets," she added. Malaysia's ruling coalition suffered its worst ever election result in 2008, losing its two-thirds majority in parliament for the first time. The upcoming elections is predicted to be even closer, although the ruling coalition is still widely expected to win. (Reporting by Siva Sithraputhran and Anuradha Raghu in Kuala Lumpur, Viparat Jantraprap in Bangkok; editing by Stuart Grudgings) Link this Share this Digg this Email Reprints

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