Malaysia braces for worst drop in 23 months as oil and gas stocks slip further

BANGKOK, Dec 1 — Malaysia’s benchmark index was headed for its worst drop in almost 23 months today as Petroliam Nasional’s plan to cut capital expenditure hit oil and gas shares while falling oil prices triggered selloffs in energy stocks across the region.

Oil fell more than US$2 (RM6.87) a barrel to a five-year low in Asian trade today, extending a steep sell-off after OPEC decided not to cut production last week, keeping markets well supplied.

Kuala Lumpur’s composite index was down 2.3 per cent, on course for its biggest single-day fall since January 21, 2013, having hit 1,778.24 during the session, its lowest since October 17.

Petroliam Nasional (Petronas) said late on Friday that it will cut capex for next year by 15-20 per cent due to falling oil prices, a move analysts said would hurt earnings of Malaysian oil and gas services firms relying on Petronas jobs.  

Among top losers, shares of Sapurakencana Petroleum plunged 13.9 per cent and shares of UMW Oil and Gas Corporation slipped 15.2 per cent.

In Bangkok, shares of the country’s biggest energy firm, PTT, were down 3.7 per cent, while those of its energy explorer unit PTT Exploration and Production fell 4.1 per cent.

The Thai SET index edged up 0.1 per cent, trimming most its early gains. Airline stocks outperformed the broader

market, led by a 3 per cent gain in shares of budget carrier Nok Airlines amid expectations of lower fuel costs.

Bangkok-based Maybank Kim Eng Securities expected crude oil prices in the world market to stay low for a while, benefiting

Asian economies and increasing the chance for looser monetary policy, it said in a report.

“Although the energy sector will still be depressed by plunging oil prices, domestic play-related sectors will benefit from the downward trend in oil prices,” it said.

Data showed Thailand’s annual headline inflation fell to a five-year low of 1.26 per cent in November, slightly less than expected, due to falling oil prices and giving the central bank leeway to keep interest rates low to support the economy.

Energy and resource shares were among those actively traded elsewhere, with Singapore’s oilfield service provider Ezion Holdings Ltd sliding 11.3 per cent and Indonesia’s coal miner PT Bumi Resources Tbk down 9 per cent. — Reuters