Malaysian share prices closed 1.1 percent lower on Thursday amid political uncertainties, with construction and palm oil stocks leading the fall, dealers said. "Increased political bickering in the largest party of the ruling coalition does not augur well for market sentiment, and will discourage more investors from participating," said TA Securities analyst Stephen Soo.
Prime Minister Abdullah Ahmad Badawi said Wednesday he would not step down after his ruling coalition's disastrous losses in recent polls. Abdullah's statement came a day after former premier Mahathir Mohamad called for his resignation as premier and president of the ruling United Malays National Organisation (UMNO).
The Kuala Lumpur Composite Index (KLCI) ended 14.07 points lower at 1,225.58, off a low of 1,219.97 on volume of 647.06 million shares worth 1.28 billion ringgit (401 million dollars).
Decliners led advancers 463 to 201, with 253 stocks unchanged and 452 untraded. The construction sector is also expected to experience a sharp slowdown this year with real growth rate expected to shrink to 1.0 percent from 5.0 percent last year, according to OSK Research analyst Jeremy Goh.
"With the Ninth Malaysia Plan approaching its midway mark and still no detailed guidelines on the private finance initiative (PFI) scheme being released, we are indeed getting skeptical," Goh said in a research note. The Ninth Plan is a government-sponsored development program that covers the five years to 2010.
Under the PFI concept, state funds such as the Employees Provident Fund will provide funding for public projects undertaken by the private sector. Among builders, Gamuda led decliners, falling 16 sen to 3.18 ringgit, while state-controlled UEM World dropped 14 sen to 3.00 ringgit. Government-linked builder Malaysian Resources Corp dropped 5 sen to 1.29 ringgit and property developer SP Setia tumbled 20 sen to 3.48 ringgit.
Among index heavyweights, state owned power utility Tenaga lost 10 sen to 7.40 ringgit while Malaysia's top bank Maybank was down 10 sen at 8.15 ringgit and state-run Telekom Malaysia also dropped 10 sen to 10.60 ringgit.