15/08/2008 (The Edge Daily), Kuala Lumpur - The local stock market fell sharply in thin volume on Friday, with the KLCI posted double-digit declines. A steep fall in certain key blue chips, notably Bumiputra-Commerce and plantation stocks dragged the benchmark index and broader market lower.

Sentiment was also dampened by one of the largest one-day decline in palm oil prices – which fell by over RM200 per tonne.

After a brief positive opening, the KLCI went into negative territory with its losses accelerating as the day progressed. The benchmark index ended 14.4 points lower at 1,095.1 points. Losers beat gainers by a 1.7-to-1 ratio on relatively low volume of 322 million shares.

Bumiputra-Commerce was the day's top loser, and the fourth most actively traded stock. The stock fell 45 sen to RM7.65, succumbing to selling pressure following the release of its second quarter results, which showed a marginal decline, and expectations of a tough operating ahead given its high reliance on the capital markets.

Other actively traded stocks include KNM, Gamuda, MRCB, Sime Darby, Tenaga and IOI Corp.

Plantation stocks continued to place a drag on the market, as palm oil prices fell sharply due to the ongoing weakness in global commodities. Palm oil prices fell by over RM200 per tonne during the day - one of its biggest one-day decline in recent times, to trade at just above RM2,400 per tonne. Just a month ago, palm oil prices were trading around RM3,500 per tonne.

KL Kepong, Asiatic and Kulim ranked among the day's top losers, alongside other blue chips like Tanjong plc. On the positive side, there was some investor interest in water-related stocks, with stocks like JAKS and KPS chalking up decent percentage gains on high volume. Other major gainers include Pharmaniaga, DiGi and MISC.

Much of the market's near-term performance will continue to be dictated by palm oil prices and plantation stocks. Palm oil prices have been falling steadily, and it is unclear where they will eventually settle at. Palm oil prices are largely correlated to soyoil and to some extent crude oil prices, and global commodity prices have been falling due to fears of slower demand.