Malaysian stocks on continued spiral – downwards

Malaysian stocks fell for a fourth straight session on Thursday.

The Malaysian index slid 2% to 1,768.18, its lowest level in five months.

Indonesian shares rose as much as 2.1%, with Bank Central Asia climbing 2.3%, while automotive retailer Astra International rose 3.2%.

JAKARTA: Malaysian stocks fell for a fourth straight session on Thursday, as a widening probe over alleged corruption linked to the previous government and continued capital outflows soured investor sentiment, while Indonesia soared for the third day running.

The Malaysian index slid 2% to 1,768.18, its lowest level in five months.

Prime Minister Mahathir Mohamad vowed to cut the national debt of 1 trillion ringgit (US$250 billion) during his first cabinet meeting this term, and widened an investigation into the scandal-hit state fund 1Malaysia Development Berhad (1MDB).

“The political malaise is weakening MYR (ringgit) and that usually triggers some outflow. But I also believe the local markets are caught up in the risk aversion,” said Stephen Innes, head of trading APAC at Oanda.

“Foreign money is not finding the situation very reassuring, even more so with the stronger USD and higher U.S. yields making servicing Malaysia’s foreign debt even that much more expensive,” he added.

Financials dragged, with Malayan Banking Bhd falling as much as 7.6% and Public Bank Bhd dropping 2.8%.

Indonesian shares rose as much as 2.1%, with Bank Central Asia climbing 2.3%, while automotive retailer Astra International rose 3.2%.

News reports of the government’s plan to disburse its Eid holiday bonus of 36 trillion rupiah (up from 18 trillion rupiah last year and 23 trillion rupiah originally budgeted for this year) is likely to push the Jakarta index up further, Trimegah Securities said in a note.

Increased bonuses to civil servants is seen as a way for the government to support consumption in Indonesia, which has been sluggish.

The country’s index of 45 most liquid stocks was up 2.6%.

Singapore edged up 0.3%, led by industrials and banks.

Lender Oversea-Chinese Banking Corp climbed 1.3%, while Singapore Airlines was 2.1% higher.

The city-state’s economy grew at a slightly faster pace in the first quarter than initially estimated, as factory activity remained robust.

Adapted from: The Edge Markets

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