FBM KLCI slides as banks, plantations shed weight

KUALA LUMPUR: The FBM KLCI failed to rebound as trading commenced on Wednesday despite the rally in US stocks overnight as Wall Street traders looked ahead to the release of bellwether tech earnings.

Malaysia's blue chips have retraced from a GDP-inspired rally with investors quick to cash in on financial stocks, the main benefactor of a pullback in semiconductor plays.

The index price chart showed more of the same on Wednesday, as the country's heavyweight banks continued their slide amid the escalation of US attacks on Iran and the rise in crude prices.

As at 9.07am, the FBM KLCI was down a quarter percent or 3.94 points to 1,716.43. Banks were seen slumping, including Maybank down six sen to RM10.96, CIMB falling thee sen to RM7.65, Hong Leong Ban kdown eight sen to RM22.12 and RHB shedding eight sen to RM8.41.

There was also selling in plantations, including Kuala Lumpur Kepong down 26 sen to RM20.88 and SD Guthrie falling 10 sen to RM6.52

Apex Securities said, moving forward, market attention will be on Alphabet and Tesla, whose quarterly earnings will serve as a test for the AI investment theme. 

"With nearly 88% of reporting S&P 500 companies beating estimates, this earnings season has so far argued that the AI pullback was a valuation reset rather than a demand problem, and spending guidance from the megacaps will either confirm that reading or reopen the capex debate," it said in its outlook.

However, it noted the elevated price of Brent is keeping imported-inflation risk alive even as equities look through the conflict, leaving markets exposed should the Fed lean hawkish at next week's meeting.

The research firm said the local market is showing signs of improvement despite a flat FBM KLCI, as the market breadth was turning positive and technology rebound broadened the rally beyond the banks.

"We would stay constructive on dips, while recognising that disappointing megacap numbers would test the region's freshly recovered chip complex."

On the market, top actives were Aimax flat at one sen, Nexgram up one sen to five sen and VS Industry rising one sne to 26 sen.