KUALA LUMPUR: Major Asian markets fell yesterday, led by Taiwan’s Taiex index that lost more than 3% as investors took profit on worries that the recent rally could have been overdone.

Softening commodity prices against a strengthening US dollar also dampened sentiments in the Asian markets.

Among the decliners, Taiwan’s Taiex fell 3.22% to 6,414.39 points, South Korea’s Kospi 1.54% to 1,371.84 points, Hong Kong’s Hang Seng Index 1.07% to 18,058.49 points while Japan’s Nikkei 225 Index shed 0.8% to 9,786.82 points.

The Shanghai Composite Index added 0.71% to 2,787.89 points while Singapore’s Straits Times Index gained 0.69% to 2,349.87 points.

At Bursa Malaysia, the benchmark KLCI fell 0.1% or 1.06 points to 1,071.79 points.

Market breadth was mixed with an almost equal number of advancing and declining stocks. There were 306 gainers, 311 losers and 259 counters unchanged. Trading volume declined from 2.1 billion to 1.4 billion shares.

Commenting on Fitch’s rating downgrade on the country’s long-term currency ratings, analysts said it would have very little impact on the local stock market.

Yesterday, Malaysia had its long-term local currency credit rating cut by Fitch Ratings for the first time since the Asian financial crisis due to the country’s worsening public finances.

Fitch lowered the rating to A, the fifth-lowest investment grade from A+. The outlook was changed to stable from negative, Fitch said in a statement yesterday.

Jupiter Securities Sdn Bhd head of research Pong Teng Siew said while the downgrade might have some impact in the near term, it was not a major concern as most currencies had been similarly downgraded.

“If we were an isolated case, then the impact could be worse. In any event, the KLCI is moving in line with regional markets where investors are taking profits from the recent rally.

“If we look at Taiwan, which is among the lead markets during this upturn, there is indication that foreign funds could be gradually pulling out and this is causing the markets to suffer, and we are no exception,” he said.

MIDF Equity Research head Zulkifli Hamzah said Malaysia’s foreign reserves were still adequate and “there is nothing much to be worried about”.

He, too, said the KLCI was moving in tandem with developments at the regional markets.

“If at all there is any impact on local listed companies, it would be on those with foreign denominated borrowings, as cost of borrowing will increase for external debts,” he said.

KLCI was dragged down by Malayan Banking Bhd, Bumiputra-Commerce Holdings Bhd (BCHB), DiGi.Com Bhd, Petronas Gas Bhd, Axiata Group Bhd and Telekom Malaysia Bhd.

This article appeared in The Edge Financial Daily, June 10, 2009.