External factors cause local stocks to trade downwards

Kuala Lumpur: Bursa Malaysia's downtrend is driven by external factors, including Greece's referendum, says Affin Hwang Investment Bank Vice-President/Head of Retail Research Datuk Dr Nazri Khan. "There are now serious concerns whether Greece will still remain as a member of the European Union. It has caused most of the Asian markets to fall today," Nazri said.

The downtrend is in line with the industry players' expectations last Friday that the debt crisis will highly influence the direction of the local and foreign stock markets and currencies.

On Sunday, over half of Greece's citizens voted 'No' to the bailout offer following the country's debt crisis.

Greece also announced that it might might exit the eurozone.

SPONSORED CONTENT

Sabah revenue hits RM6.97 billion: Hajiji says GRS State Government may see full term

Kota Kinabalu: The Sabah Government continued its momentum in managing the economy in line with the commitment and spirit of the Sabah Maju Jaya (SMJ) when it posted record high state revenue of RM6.973 billion last year.

Among the Asian bourses which fell included Hong Kong's Hang Seng (-857.62 points to 25,206.49); Japan's Nikkei 225 (-427.67 points to 20,112.12); and, Singapore's Straits Times (-25.36 points to 3,317.37).

Nazri expects the current market condition to normalise within one or two weeks.

"I hope Greece will stay in the eurozone after the negotiations," he said, adding that the weakening ringgit today was also influenced by external factors.

The local currency today breached the 3.80 level against the US dollar this morning—the level at which it was pegged against the greenback in September 1998.

The peg, introduced during the East Asia financial crisis to arrest a slide in the currency, was scrapped in 2005.

He said focus will be on the US Federal Reserve's (Fed) Open Market Committee meeting this week, which may decide on raising its interest rates.

"I think the possibility of the Fed increasing the rates is very low due to the current situation. However, investors are still cautious as some of the executive council members had suggested introducing a new rate sooner-than-expected.

"However, on the bright side, with the weakening ringgit, it would be attractive for foreign direct investments as the local stocks would be cheaper, hence a good time for investors," he said.

Stay up-to-date by following Daily Express’s Telegram channel.

Daily Express Malaysia

On the current 3.8-level compared with the crisis in 1998, he said the market today was much better supported by robust banking system and lower foreign debts.

"Our private sector has successfully managed their portfolios coupled with the lower interest rates imposed by the Bank Negara Malaysia," he said. – Bernama

Try 1 month for RM 18.00

Try 1 month for RM 18.00

Try 1 month for RM 18.00