Malaysian shares finished at their lowest in almost a month on Wednesday due to worries that the country may have been hit by the bird flu outbreak but the rumours were swiftly denied by the authorities.
A senior veterinary department official told Reuters that Malaysia remained free of bird flu which has spread to 10 countries in Asia, killing at least 14 people.
The key Kuala Lumpur Composite Index fell 1.7 percent to 804.83 points on moderate overall volume of 519 million shares. Losers beat gainers four to one.
"It is due to that rumour and also partly due to the holidays. Some of the fund managers are not in town," said Wan Ahmad Satria Wan Hussein, Mayban Securities' head of dealing. The stock market was closed on Monday and Tuesday due to public holidays.
Shares of poultry-related firms were hit hard. Fast-food chain operator KFC Holdings lost 4.8 percent to 4.40 ringgit and breeder Leong Hup dropped 4.4 percent to 1.72 ringgit. Ayamas, a retailer of poultry-based products, slipped 1.5 percent to 1.99 ringgit.
"No one knows yet how severe the outbreak can be," said Ngu Chie Kieng, research head at brokerage TA Securities. "Investors are opting for caution and pruning their holdings."
Mayban's Wan Ahmad expects more selling by investors this week, and the key index could test the 800-point support level.
Among Kuala Lumpur's heavyweights, top lender Malayan Banking and plantation firm IOI Corp dragged the key index lower.
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