Bursa Malaysia to trend lower on global economic uncertainty
Posted on June 10, 2012, Sunday
KUALA LUMPUR: Uncertainties in the global economy are expected to drag the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) lower next week.
Affin Investment Bank head of Retail Research Dr Nazri Khan said China’s unexpected interest rate cut and the US Federal Reserves’ silence on the prospect of new monetary stimulus would further weigh down market sentiment.
“Risk sentiment will centre on Spain particularly on Fitch’s downgrades and the European Central Bank’s slow bailout to avoid Spain shutting out from the credit markets,” he told Bernama.
He said investors were also put off by Germany’s consistent reluctance to bail out troubled peripheral nations, stoking rumours that the highly rated Germany and France, might no longer have the necessary financial resources to rescue their neighbours.
“We think there is a high chance that most investors will suspend all bets until the outcome of the Greek election on June 17 and possibly to the US Federal Reserve’s meeting on June 19-20 for better clarity on the market direction,” he said.
On the local front, he expected busy corporate newsflow to cushion the broad market weakness including Khazanah Nasional Bhd emerging as the top bidder for a controlling stake in India’s family-owned business process outsourcing-based Aegis Global, and SP Setia Bhd and Sime Darby Bhd being the preferred bidders to buy London’s Battersea Power Station.
Stocks that also were expected to attract attention would include Cahaya Mata Sarawak Bhd that had formed a joint venture for a proposed RM850 million integrated phosphate plant in Sarawak and K&N Kenanga Holdings that had received approval from Bank Negara Malaysia to acquire ECM Libra at RM890 million.
“We are pegging 1,560-1,550 levels as the immediate support while 1,580-1,585 as the next immediate resistance.
“Given the uncertain fundamentals and technicals, we advise traders to trade cautiously, while the longer term investors may want to raise some cash by selling on strength as opportunity to accumulate at lower levels may prevail in the coming months,” he added.
This week, the market started in red and later rebounded, influenced by bullish performance on Wall Street.
The local bourse, however, turned red again ahead of the weekend on profit-taking amid lack of fresh leads.
On a Friday-to-Friday basis, the FBM KLCI lost 2.97 points to 1,570.62.
The Finance Index earned 39.73 points to 14,068.21, the Industrial Index rose 23.79 points to 2,779.27 while the Plantation Index erased 29.12 points to 8,300.66.
The FBM Emas Index lost 23.58 points to 10,705.57, the FBM ACE Index shed 2.62 points to 4,222.22, the FBM Mid 70 Index fell 9.19 points to 11,640.25 and the FBM T100 Index declined 17.71 points to 10,529.58.
The weekly volume fell to 3.37 billion shares valued at RM5.64 billion from 4.3 billion shares worth RM7.03 billion registered last week.
The main market turnover declined to 2.34 billion shares worth RM5.47 billion from 3.03 billion shares valued at RM6.85 billion.
Volume on the ACE Market decreased to 492.73 million shares worth RM105.89 million from 775.57 million shares valued at RM112.84 million.
Warrants decreased to 453.06 million units worth RM61.43 million against last week’s 483.14 million units valued at RM65.17 million. — Bernama