25/02/2011 (The Star Online) - The FTSE Bursa Malaysia KLCI (FBM KLCI) fell below the crucial 1,500 level yesterday, mainly dragged down by plantation stocks amid external uncertainties.

The benchmark index shed 21.24 points, or 1.41%, to close at 1,489.87. About two billion shares worth RM2.6bil changed hands yesterday. Losers outnumbered gainers by 863 to 116, while 155 counters were unchanged.

The local bourse has been in a correction mode since it reached its all-time high of 1,576.95 on Jan 6.The plantation index declined 142.37 points to 7,593 while the finance index fell 147.04 points to 13,553.45.

Among the top losers, Batu Kawan Bhd dropped 38 sen to RM15.60, BLD Plantation Bhd fell 31 sen to RM4.80, Far East Holdings Bhd inched down 46 sen to RM7.10, while Genting Bhd and Kuala Lumpur Kepong fell 30 sen each to RM10.08 and RM20.78 respectively.

Asian markets were mostly in the red yesterday.

Tokyo's Nikkei 225 dropped 126.39 to 10,452.71, the Straits Times index went down 28.77 to 2,973.08, the Hang Seng index lost 305.86 to 2,2601.04 while the Kospi index dipped 11.75 to 1,949.88. However, Taiwan's Taiex index rose 12.70 to 8,541.64.

An technical analyst told StarBiz that plantation stocks were down on lower prices for crude palm oil (CPO), which fell RM59 to RM3,455 per tonne.

Banking stocks were also affected by global economic concerns.

According to Bloomberg, CPO tumbled to its lowest in almost three months on expectation that output in Malaysia, the second-largest producer, might increase this year and on speculation of continued unrest in Libya and the Middle East.

“The external events like anti-government protests in the Middle East and North Africa, natural disasters and market downgrades have caused the worries in the regional market. All this factors have contributed to the uptrend in oil prices and inflation, affecting market sentiment,” the analyst said.

He expected the FBM KLCI to stay in consolidation mode in the intermediate term.

“There is still a downside risk to the local market, whose performance going forward is unclear at the moment. The drop in CPO prices is likely to continue affecting plantation stocks,” he said.

Crude oil was trading around US$100 per barrel on the Nymex and the higher oil prices are expected to affect key sectors like utilities, tourism and aviation.

JF Apex Securities Bhd deputy managing director Lim Teck Seng said the market was very volatile at the moment and would continue to be in this mode due to foreign selling pressure and external factors.

“Foreign funds have been selling blue chips since last month on profit taking and they continue to do so recently due to the uncertainties,” he said, adding that the funds were selling banking, plantations and oil and gas stocks.

However, he added: “The foreign funds have not exited the Malaysian market as the local currency is still strong. The impact from big government projects and possible elections will somehow support the market.”