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Malaysian shares slide amid global growth woes, 1MDB concerns

KUALA LUMPUR (NewsRise) - Malaysian shares fell to one-week lows on Thursday and the ringgit slid to its lowest level this month, as global growth concerns and renewed worries surrounding state fund 1Malaysia Development dented demand for the nation's assets.

The nation's benchmark FTSE Bursa Malaysia declined 0.72% to 1,657.54 points, its lowest level since July 14.

Genting, IHH Healthcare, SapuraKencana Petroleum and financial stocks led broad losses on the KLCI Thursday, while British American Tobacco Malaysia and YTL Corp were among the handful of stocks to close higher.

The ringgit slipped 0.35% to 4.038, its lowest since June 28. The currency, which has fallen for the last four sessions, is down 2.5% this week so far and is on course for its worst weekly decline this year.

The KLCI and the ringgit lagged behind all their regional peers on Thursday.

The International Monetary Fund on Tuesday cut its global growth forecast for 2016 and 2017 for the second time this year, citing uncertainty stemming from Britain's decision to leave the European Union.

"Despite hopes of more stimulus from central banks and expectations of more mega project roll-outs by the Malaysia government, the KLCI may witness near term profit taking pullback amid IMF's pessimistic outlook on global economy, revival of 1MDB saga and stretched technical indicators," said Sia Ket Ee, an analyst with Hong Leong Investment Bank.

U.S. prosecutors filed a lawsuit yesterday to seize assets worth over $1 billion they said were misappropriated from 1MDB. The Malaysian state fund was at the center of a graft scandal last year which sparked a sharp decline in the ringgit and a selloff in the country's shares.

In a statement released on Thursday, 1MDB said it is not party to the lawsuit, does not own any assets in the United States and has not been contacted by any authority regarding the case.

Singapore authorities on Thursday said they seized assets worth S$240 million related to an investigation in 1MDB for possible money laundering.

Global markets await the outcome of the European Central Bank's policy meeting later today. Most economists expect the bank to hold policy steady, but investors will be interested in comments about economic growth and hints at possible easing later this year.

In Asian markets, Japan's Nikkei 225 index and China's Shanghai Composite rose 0.77% and 0.37%. Hong Kong's Hang Seng rose 0.54%, while South Korea's KOSPI declined 0.09%.

In Southeast Asia, Singapore's Straits Times fell 0.18%, Indonesia's Jakarta Stock Exchange Composite declined 0.49% and Thailand's SET index slipped 0.43%. Philippine's PSE Composite rose 0.63%.

On the KLCI, 24 of the 30 constituents ended lower Thursday, while overall declining issues outnumbered advancing ones 649 to 202.

Foreign investors sold 45.4 million ringgit ($11.2 million) in Malaysian shares on Wednesday, according to Kenanga Research, marking the first daily outflow from the nation's equities since last week's surprise rate cut by Bank Negara Malaysia.

Genting slid 3.88% to 8.68 ringgit, leading losses on the KLCI, as investors took profits after the stock's recent rally. The gaming conglomerate rose for the preceding six sessions and is the best performing stock on the KLCI this month with a near 6% advance.

IHH Healthcare slid 1.82% to 6.48 ringgit, giving up yesterday's 0.8% advance. The hospital operator is down 2.5% this week.

SapuraKencana Petroleum declined 1.4% to 1.41 ringgit. The stock's correlation with the crude oil prices has weakened as the capital expenditure reduction cycle by oil explorers is dampening the effect of rising crude prices for oil and gas service providers. The benchmark Brent crude oil contract was trading little changed at $47.20 a barrel after rising one percent overnight.

Hong Leong Financial Group and Malayan Banking led losses among the financial stocks, sliding 1.28% to 15.46 ringgit and 1.23% to 8.02 ringgit. Hong Leong Financial had risen 3.5% this week till Wednesday, supported by take sale of its insurance units.

CIMB Group Holdings fell 0.94% to 4.2 ringgit, AMMB Holdings ended 0.92% lower at 4.31 ringgit and Hong Leong Bank slipped 0.9% to 13.28 ringgit.

Mobile operator Maxis declined 0.98% to 6.06 ringgit. The company's June quarter earnings, declared yesterday, were broadly in line with expectations. But market weakness and cautious outlook on sector amid intensifying competition are weighing on the stock, dealers said.

Axiata Group fell 1.04% to 5.69 ringgit, while DiGi.Com slipped 0.2% to 4.9 ringgit.

PPB Group declined for the second day, falling 0.86% to 16.12 ringgit. The agribusiness major yesterday said losses at its associate Wilmar International will adversely affect its June quarter earnings.

Resort-to-rail conglomerate YTL Corp rose 1.23% to 1.64 ringgit, recovering from a three-day 4.8% slump. Cigarette maker British American Tobacco Malaysia rose 0.48% to 54.76 ringgit.

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