KL shares seen up on Wall St rally

MALAYSIAN shares are expected to rise today after the US government’s massive bailout for Citigroup spurred a big relief rally on Wall Street.

A surprise rate cut from Malaysia’s central bank is unlikely to boost markets as it shows Bank Negara seeking to forestall a looming economic slowdown.

The Dow Jones industrial average raced up 4.9 per cent to 8,443.39 while the Standard & Poor’s 500 Index jumped 6.5 per cent to 851.81 after the US government said it will inject US$20 billion into Citigroup in an effort to prevent a bank collapse.

“The Citigroup bailout is a big relief for the market. But I don’t expect a broad-based rally on the local market, it may just be a few key blue chips,” said a dealer from a bank-backed brokerage.

Malaysia’s benchmark share index yesterday ended 1.3 per cent lower at 855.39 points, still off its year low of 801.27 points hit on October 28.

The central bank’s decision yesterday to cut its key interest rate will have limited impact on the local market’s performance, said the dealer.

“What’s important now is what’s happening in the US and I don’t think a 25 basis point cut would make a difference,” he said.

Bank Negara, the central bank, cut its overnight policy rate to 3.25 per cent from 3.50 per cent on Monday, the first rate change in over 2 years and the first cut in over 5 years, and signalled it was ready to cut further. - Reuters