Malaysia Business News

[Dow Jones] RHB Research says inflation in Malaysia is likely to remain elevated in 2012 but is unlikely to pose a major threat to the economy. "Furthermore, it will likely be driven by cost-push rather than demand-pull that will unlikely prompt the central bank to tighten its policy to control it," it adds. It expects Bank Negara Malaysia to hold its overnight policy rate unchanged at 3.00% in the foreseeable future. Thursday, the Malaysian central bank stood pat and signalled that it may not raise its key rate for the rest of the year as concerns over economic growth have heightened in recent months due to a slowdown in the global economy. (ankur.relia@dowjones.com)

[Dow Jones] Malaysian stocks face further downside in the near term on the risk of more foreign selling after the benchmark KLCI's 6.6% drop in August, says Maybank IB's Wong Chew Hann. Data from the stock exchange show foreigners were net sellers in August with MYR3.8 billion outflow after four consecutive months of net buying during the April-July period. "We believe that there could still be some near-term downside potential as August's net activities reversed out just 58% of the total net foreign buying in April-July," says Wong in a note. He adds, the KLCI is expected to rebound toward the year-end to the house's revised target of 1520. The KLCI is down 0.5% at 1456.58.(jason.ng@dowjones.com)

-- Euro falls, while the Swiss franc and the yen benefit as investors flee riskier assets

-- Concerns about more China tightening add to global woes

By Shri Navaratnam and Ga-Woon Philip Vahn

Of DOW JONES NEWSWIRES

SINGAPORE (Dow Jones)--Asian shares fell sharply Monday, while the euro skidded to multi-week lows against the U.S. dollar after Friday's grim U.S. jobs report heightened concerns of a recession in the world's largest economy.

Adding to the global gloom, China's shares continued to lose ground on persistent worries about further tightening steps from Beijing.

"It is tough for risk assets to make any sort of sustained run higher whilst questions pertaining to U.S. growth seem to lie at every turn," said CMC Markets' senior foreign exchange dealer Tim Waterer.

Japan's Nikkei Stock Average was down 1.7%, Australia's S&P/ASX 200 fell 2.1%, while South Korea's Kospi Composite lost 2.9%. Hong Kong's Hang Seng Index slumped 2.2%, India's Sensex declined X.X%, while the Shanghai Composite Index was down 1.5%.

Dow Jones Industrial Average futures were down 49 points in screen trade.

The dismal U.S. jobs report sent the euro to its lowest level against the dollar since Aug. 12 at $1.4136, and drove investors to the safety of the Swiss franc, which built on Friday's gains against the single currency.

The single currency was also hurt after talks between Greece and a group of visiting international inspectors were suspended Friday, while news German Chancellor Angela Merkel's Christian Democrats has experienced a setback in local election unsettled markets.

The euro was fetching CHF1.1173 against the Swiss franc, from CHF1.1210 late Friday in New York, and $1.4168 against the dollar, from $1.4205, while against the yen it was at Y108.75, from Y109.12.

The dollar was at CHF0.7888, compared with CHF0.7885, and at Y76.76 against the yen, from Y76.82.

Spot gold took a breather and was at $1,879.40, down $4.80 from Friday's New York trade, while oil prices fell with the October Nymex crude oil futures contract down 63 cents at $85.82 per barrel.

Concerns around more tightening in China, which has been a tower of strength during the global financial crisis, added to the grim global backdrop. "In the short term, factors including concern over monetary policy will weigh on (China) shares...the mood is very pessimistic," for now, said Li Lei, an analyst at Gold State Securities.

Banking stocks bore the brunt of those policy tightening concerns in Shanghai, with China Minsheng Banking 1.2% lower and Bank of China down 1.4%.

The sour mood saw exporter and cyclical stocks leading the broad-based selloff across regional markets. Honda Motor lost 2.4%, while Samsung Electronics dropped 2.3% in Seoul.

Samsung Electronics was also dealt a blow after a German court accepted Apple Inc.'s request to ban Samsung from selling and marketing its new tablet device in Germany.

September Japanese government bond futures were up 0.39 at 142.68 points on weak equities.

"There's no rush to buy (stocks) with the U.S. market closed on Monday and European markets likely to be fragile after Greek debt talks broke down on Friday," said RBS Morgans principal investment adviser Christopher Macdonald in Sydney.

GMT [Dow Jones] TA Securities says investors should avoid Malaysian stocks with a high level of foreign shareholders and accumulate dividend-yielding stocks instead; the house keeps its Neutral view on Malaysian stocks with year-end target for the benchmark KLCI of 1490. "We think there is further downside risk of earnings forecasts if the economic momentum fails to pick up. Moreover, external shocks, whether in the form of double dip recession in U.S., worsening European banking crisis or a slowing China economy, could further dampen corporate earnings going forward," says TA Securities. It notes, the top five stocks with a high level of non-strategic foreign shareholdings are AirAsia (5099.KU), Genting Bhd. (3182.KU), IJM Corp. (3336.KU), CIMB Group (1023.KU) and Uchi Technologies (7100.KU). For dividend stocks, the house picks Carlsberg Brewery Malaysia (2836.KU), Lingkaran Trans Kota (6645.KU), Berjaya Sports Toto (1562.KU), Boustead Holdings (2771.KU) and YTL Power (6742.KU). The KLCI is up 1.5% at 1468.37.