Plantation sector- the last shoe to drop?

Over the past few months, we have seen many sectors in our market succumbing to selling pressure. The last sector that was still standing tall a few weeks ago is the Plantation sector. From the chart below, we can see that Plantation index has peaked in mid-January at 8949 level. Since then, this index had dropped to an intermediate 'low' of 7524 level at the end of January; and, rebounded to make a lower 'high' of 8600 at the end of February; and, dropped to a lower 'low' of 6862 in mid-March. Thus, a downtrend (maybe, a short-term downtrend) is confirmed for the Plantation sector.


Chart: Plantation's weekly chart as at April 2, 2008 (courtesy of Quickcharts)

The correction in the Plantation stocks has affected not only the Malaysian stock market, but it has also dragged down the Jakarta Stock Exchange by 51 points (or, 2.1%) yesterday (go to the Indo Pos' report, which is in Bahasa Indonesia). The Indonesian market was also affected by report that its exports of edible oil & fat products has dropped by 34.9% to USD 1 billion in February from USD 1.6 billion in January due to the government's imposition of a progressive export tax of up to 25% on CPO (go here for more). As you may be aware, there was some speculation that our government may be looking in making a similar move.

The correction in the Plantation stocks, coupled with the 'new' political uncertainties (such as renewed calls for Badawi's resignation), will likely to put more pressure on our market in the days ahead. Be guided accordingly.