KUALA LUMPUR (Dec 1): The FBM KLCI gained 0.45% following the agreement by the Organization of Petroleum Exporting Countries (OPEC) to cut oil production, the first reduction in output since 2008.
The benchmark index rose 7.32 points to close at 1,626.44.
OPEC had agreed yesterday on a production cap on oil by around 1.2 million barrels per day from January amid the prevailing slump in crude oil prices.
Inter-Pacific Securities head of research Pong Teng Siew said the decision by OPEC was a major contributing factor to the gain in the index today.
“The OPEC decision was a big factor leading to a sharp increase in global crude oil prices, which had a positive effect on the index.
“However, the actual gains from a cut in production may not be as expected by the market as some quarters say the cap could be imposed on next year’s targeted production,” said Pong.
Oil and gas (O&G) companies rallied after the news, with counters such as SapuraKencana Petroleum Bhd, UMW Oil & Gas Corp Bhd and Petronas Dagangan Bhd among the top gainers.
Besides the OPEC factor, Pong said foreign funds were seen to be paring down their selling after a selldown yesterday — which he attributed to a year-end portfolio adjustment – with local funds taking the lead in the local market.
Across the board, some 1.53 billion shares worth RM1.6 billion were exchanged. Market breadth turned positive as gainers outnumbered decliners 493 against 307, while 296 counters were unchanged.
PPB Group Bhd led the gainers, while the decliners were topped by SAM Engineering & Equipment (M) Bhd. The top active stock was Hibiscus Petroleum Bhd.
Elsewhere in Asia, Japan’s Nikkei 225 rose 1.12%, Hong Kong’s Hang Seng gained 0.39% while South Korea’s Kospi increased 0.01%.
Reuters said oil prices and energy shares swept higher today after OPEC agreed to cut crude output to clear a glut, while the dollar and bond yields rose sharply on prospects that resulting inflationary pressures will lead to higher interest rates.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.6%.
Source: The Edge