Malaysian stocks tumbled the most in a decade today with government-linked companies hardest hit after the weekend’s political upsets.
At 2:58pm, trading was stopped for an hour as the Kuala Lumpur Composite Index (KLCI) fell 130.01 points to 1,166.32, from the previous day’s closing level 1,296.33 – about 10.03 percent.
Trading resumed at 3:58pm, and the stock market recovered slightly.
After it closed for the day at 5pm at 1,117.2, a drop of 123.11 or 9.5 percent.
This was the biggest one-day percentage loss in recent years. The turnover was valued at RM2.47 billion.
State-owned banks like Bumiputra-Commerce Holdings and government-linked companies such as Malaysian Resources Corp, UEM World Bhd and Sime Darby were among counters that registered falling prices.
Construction-related companies hit
The ringgit also lost 1.2 percent, to RM3.198 to the dollar – the biggest depreciation since June last year.
While most companies suffered losses, construction-related stocks were among the hardest hit.
Malaysian Resources Corp, the company that secured the Penang Sentral development project, plunged 66 sen, or 34 percent, to RM1.270.
Sime Darby declined RM1.6, or 15 percent, to close at RM9.40 and Bumiputra-Commerce Holdings retreated RM1.4, or 13 percent, to RM8.80.
It is believed that investors fear political instability and that companies linked to the government could be affected by changes in policies as a result of Barisan Nasional’s worst ever electoral outing.
Circuit breaking triggered
According to a statement from Bursa Malaysia, the decision to halt trading this afternoon is to “maintain market stability and allow traders to consider new information before making investment decisions”.
“When the KLCI registers a 10-percent drop from the previous day’s closing level, the circuit breaker is automatically triggered.”
The one-hour break is to allow a ‘cooling-off’ period.
However, as investors unloaded local stocks, credit-rating agencies Fitch and Moody’s maintained their sovereign ratings on Malaysia.
Despite acknowledging that the level of political uncertainty in the country had increased, the agencies said the economy is still on solid ground.