Share prices on Bursa Malaysia extended their falls for the second consecutive day on Friday, March 12 as profit-taking activities continued after the index had rallied to fresh two-year highs on Wednesday.

Investors also continue to worry about further monetary tightening measures in China, following the recent stronger than expected Chinese inflation data.

On Friday, the FBM KLCI was in negative territory throughout the day, ending 10.2 points lower at 1,311.2. Despite the losses over the last two days, the index is still up 11.4 points for the week.

Market breadth was negative with declining stocks beating advancing ones by a nearly 2-to-1 margin. Trading volume continued to fall as investors turned more cautious, declining from 792 million to 716 million shares.

Actively traded stocks include MAS, AirAsia, IOI Corp, Berjaya Corp, Talam, Maybank and MRCB. Major gainers include Keck Seng, Ho Hup, Eng Technology, Top Glove and Ireka Corp. Losers include KL Kepong, CIMB, Hai-O and Bursa.

On Thursday, China had released inflation data showing consumer prices rising 2.7% in February from a year earlier, and above the 2.4% rate expected by economists

Fears over a tightening of China’s monetary policies – and the impact on asset prices – have long made their rounds, even since last year. And they will likely continue to do so. The China concerns tend to periodically give global investors the jitters, until something else comes along to overshadow them, such as problems in Greece or economic data from the US.

In the absence of strong positive leads – and with global stock prices recently reaching six-week highs, the China concerns are likely used as a catalyst to trigger profit-taking activities.


This is also likely the case for the local stock market, where the FBM KLCI hit a two-year high on Wednesday.

On the local front, the recently ended earnings season and strengthening ringgit have provided some positive catalysts.

Looking further out, the next leads are likely to come at the end of the month, when the Prime Minister unveils the New Economic Model and addresses the InvestMalaysia conference, which traditionally has some market-positive initiatives. Until then, the local bourse is likely to take its cue from external issues and Wall Street.