Gamuda: Breaking The Last Straw

Market commentary from Inside Asia on yesterday's trading, Negative sentiment drags market lower

• Gamuda was the most heavily traded stock for the day. The share saw one of its worst sell off in recent memory, falling 78 sen or 16% to RM4.20. Investors apparently dumped the shares following news that its managing director, and one of the company's primary driving forces, reduced his stake from 5.2% to just 1.7%. The market was spooked by what the move may signify. Given the already jittery market conditions, it is unsurprising that investors are opting to err on the side of caution.

Market commentary from the Edge, 22-02-2008: Bursa succumbs to selling pressure

• PETALING JAYA: The Kuala Lumpur Composite Index fell 2.45% or 34.2 points to 1,360.56 in the morning session today, in line with losses at regional indices after Wall Street closed almost 1.2% lower overnight.
  
  Trading volume was relatively thin with 474.8 million shares valued at RM1.04 billion. There were 57 gainers and 781 losers.
  
  Yesterday, the Dow Jones Industrial Average fell 142.96 points to 12,284.3 after the Philadelphia Federal Reserve reported that regional manufacturing fell more than predicted, sparking worries of a recession.
  
  Also, the US Federal Reserve cut its economic growth forecast for the economy Wednesday and suggested that more rate cuts could be on the way to combat further weakness.
  
  Over at the regional markets, the Shanghai A Shares Index fell 2.99% or 142.23 points to 4,608.31, Hong Kong's Hang Seng Index down 1.84% to 23,188.25 while Japan's Nikkei 225 lost 1.61% to 13,468.53.
  
  South Korea's Kospi Index fell 1.51% to 1,678.54 and Singapore's Straits Times Index was down 1.2% to 3,018.06.
  
  CIMB Research head of research Terence Wong said the KLCI was playing catch-up with other markets, and that he would not be surprised if foreign funds were withdrawing their investments.
  
  "The KLCI bucked the trend and performed better than the other regional indices earlier. So it is not surprising that it is falling in tandem with them. Also, Asian markets including the KLCI tend to normally follow the trading pattern at Wall Street," he said.
  
  He said the heavy sell down on Gamuda Bhd yesterday might have also spooked foreign investors, prompting these funds to make an exit.
  
  "But we do not know for certain how much has flowed out," said Wong.
  
  At the Bursa Malaysia this morning, Gamuda continued to take a pounding and was the most actively traded counter with more than 30.44 million shares done. It fell 30 sen to RM3.90.
  
  Gamuda tumbled more than 15% yesterday when its managing director Datuk Lin Yun Ling ceased to be a substantial shareholder after disposing of 70 million shares on Wednesday.
  
  The sell-down this morning was in spite of an assurance by Lin yesterday that he would retain his remaining stake for another 18 months at least.

Here is a screen shot on how Gamuda and the KLCI is faring.