Malaysia: Stocks decline to four-month low as Tenaga slides

[KUALA LUMPUR] Malaysia's benchmark stock index fell to the lowest level since January as Tenaga Nasional Bhd tumbled and analysts downgraded Sime Darby Bhd after the nation's largest listed plantation stock reported disappointing earnings.

The FTSE Bursa Malaysia KLCI Index sank 1.1 per cent to 1,767.38 at 5 pm in Kuala Lumpur, the lowest close since Jan 20. State-owned electricity utility Tenaga slid 3.4 per cent to a five-month low, extending Friday's 2.1 per cent drop, after the Edge Review said the company may acquire the power assets of 1Malaysia Development Bhd. Sime Darby slid to a 2011 low.

Tenaga's stock has slumped 5.4 per cent in two days since the report, dragging down the benchmark gauge, which is close to giving up all its gains this year. 1MDB, whose borrowings had reached RM41.9 billion (S$15.57 billion) through March 2014, flirted with default earlier this year after delaying payment on a RM2 billion loan.

"Markets are spooked by reports on 1MDB," said Raymond Tang, the Kuala Lumpur-based chief investment officer for the Asean region at CIMB-Principal Asset Management Bhd, Malaysia's second-largest private asset manager. "Sentiment is also weighed" down by interest-rate concerns in the US and Greece's debt woes, he said.

Tenaga Chief Financial Officer Fazlur Rahman Zainuddin couldn't be immediately reached for comment on his mobile phone.

The near-term outlook for Malaysia's stock index has turned "bearish," according to Hong Leong Investment Bank Bhd in a report on Monday. The KLCI has tumbled 5.1 per cent from its April high and is up 0.4 per cent this year.

Foreigners were net sellers of Malaysian stocks for a fourth straight week, bringing outflows this year to RM4.75 billion, compared with RM6.9 billion of outflows for 2014, according to MIDF Amanah Investment Bank Bhd in a report on Monday.

BLOOMBERG