Malaysian shares fall

Malaysian share prices closed sharply lower on Monday on panic selling after the US market tumbled last week on poor jobs data and fears over its mortgage industry, dealers said. The Kuala Lumpur Composite Index (KLCI) closed down 44.52 points or 3.3 percent at 1,290.90.
Losers led gainers 1,015 to 60, with 80 stocks unchanged and 188 counters untraded. Trading volume was 1.301 billion shares, valued at 2.251 billion ringgit. This comes after US Investment bank Bear Stearns said Sunday that co-president and co-chief Operating Officer Warren Spector had resigned following the collapse of two of its hedge funds that invested in risky mortgage-backed securities.
Bear Stearns Cos' chief financial officer Sam Molinaro described the current turmoil in the credit market as being the worst he had seen in 22 years. The Dow Jones Industrial Average Index plunged more than 280 points or two percent Friday.
"In a sense, today's correction is overdone, but I think there will be further downside as investors remain fearful the US sub-prime mortgage crisis will generate a bigger problem," Lim Chee Sing, managing director of RHB Research, said.
"Investors are worried over what's happening with first, Australian bank Macquarie, and now Bear Stearns, with warnings that this could be worse than the dotcom bubble burst of 2000 and the collapse of hedge fund Long Term Capital Management during the late nineties," said Cheah King Yoong, head of research at SJ Securities.
"Reports are also coming out of the US that Bear Stearns could face the collapse of a third fund, so investors are really getting jittery," Cheah said. But the experts added they expected the impact arising from the US sub-prime to be limited only to the capital markets, and not the real economy, unless the sub-prime crisis starts adversely affecting employment and consumption.
The market they said was expected to remain sentiment-driven for now, but Lim of RHB said he does not expect the current credit crisis in the US to derail global economic growth or impact US consumer spending in a big way.
Banks led Monday's drop, with Bumiputra-Commerce, the second largest bank in Malaysia posting the sharpest fall, plunging 0.70 ringgit to 10.40. The country's largest lender Maybank declined 0.30 to 11.70 while Public Bank, ranked third, lost 0.10 to 9.65.
Among blue chips, national power company Tenaga slid 0.30 to 10.40, state-controlled Telekom Malaysia fell 0.10 to 10.00. IOI Corp, the world's largest palm oil producer, lost 0.25 ringgit to 5.00 ringgit, while gaming group Genting declined 0.25 to 7.50. National carmaker Proton ended the day flat at 5.55 after rising to 5.60. The loss-making national car maker said it is exploring the possibility of setting up a plant in Egypt next year.