KLCI stumbles over 30pts in late afternoon on new taxes fears

  • Markets
  • Wednesday, 10 Oct 2018

KUALA LUMPUR: Foreign fund selling hammered blue chips as worries about higher taxes – such a capital gains tax – cast a pall of gloom over the stock market on Wednesday, with the losses outpacing the regional markets.

At 3.35pm, the FBM KLCI was down 32.41 points or 1.83% to 1,741.74. Turnover was 2.19 billion shares valued at RM1.84bil. Declining stocks hammered gainers more than 10 to one, with 976 losers to 93 gainers and 252 counters unchanged.

China's blue-chip index fell for a third consecutive day on Wednesday, but the main Shanghai Composite index rose as investors weighed government support for continued growth against the impact of the US-China trade war, Reuters reported. At the close, the Shanghai Composite index was up 0.2% at 2,725.84.

CIMB Equities Research is positive on the Malaysian Government’s push to reform the country in the medium- to long-term. However, it maintains its view that the stock market could be volatile in the months ahead due to short-term domestic policy uncertainty and external risk factors.

“We maintain our KLCI target of 1,684 (15.7 times price-to-earnings),” it said on Wednesday. 

At Bursa, which had seen foreign funds being net sellers over the past two days, was hit by selling of power giant Tenaga Nasional, Petronas Gas, Genting and Axiata.

Consumer stocks were also hit with F&N down RM1.88 to RM35.60, Nestle 50 sen lower at RM145.90 and Carlsberg 32 sen lower at RM19.34.

Tenaga fell 66 sen to RM14.72, Petronas Gas 50 sen to RM17.80, Genting 42 sen to RM7.34 and Axiata 35 sen to RM4.01.

Gamuda tumbled 29 sen to RM2.09 with 107 million shares done on growing worries about its particiaption in the MRT 2 project.

Tony Pua, member of parliament and political secretary to the Minister of Finance, says the government  will attempt to maximise the savings it can reasonably achieve from the underground works of the MRT2 project.

In an open letter to the directors of MMC-Gamuda, Pua took aim at the joint venture for what he claims to be a campaign to paint the termination of its underground contract for the MRT2 as "hasty and ill-conceived".

Citing a study by an independent engineering consultant, Pua said MRT Corp should expect total savings of between RM4.19bil and RM5.79bil for the estimated 60% portion of works that are yet to be completed. However, he noted that MMC-Gamuda had only offered to reduce the contract value by RM2.13bil or 12.7% to RM14.58bil. 
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