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KUALA LUMPUR, Jan 22 (Reuters) - Malaysian shares are likely to drop sharply on Tuesday following a global sell-off on growing worries about a U.S. recession, with banks and plantation stocks such as IOI Corp (IOIB.KL: Quote, Profile, Research) being hit hard,dealers said. U.S. stock index futures sank in holiday-shortened trade in New York on Monday, indicating Wall Street was likely to join the global equity markets plunge when trading resumes on Tuesday.
Shares in Tokyo and Seoul also fell sharply in early trade on Tuesday. "There will be panic selling in Malaysia too," said one dealer at a local brokerage. "The market looks very much bearish and I don't see any immediate bottom yet."
He expected the main index, the Kuala Lumpur Composite Index. KLSE, to drop 2 to 2.5 percent, adding to Monday's 2.2 percent loss. The 100-share index closed down at 1,408.60 points on Monday. Top two banks, Malayan Banking (MBBM.KL: Quote, Profile, Research) and Bumiputra-Commerce (BUCM.KL: Quote, Profile, Research), led falls, dipping 4.1 percent and 5.4 percent respectively.
Another dealer said the index could find an immediate support at around 1,380 points. The January futures contract KLIF8 put the index at 1,387.5. U.S. markets were closed on Monday for the Martin Luther King Day holiday, but stock index futures sank, indicating Wall Street was likely to join a global equity markets plunge that may usher in a bear market when trading resumes on Tuesday.
There was no respite for other leading centres, with Britain's leading shares falling 5.5 percent, the largest one-day loss since Sept. 11, 2001, while Japan's benchmark Nikkei tumbled more than 3 percent to its lowest close since Oct. 2005.
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