Bursa Malaysia to rebound next week as market leads return

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KUALA LUMPUR: The FTSE Bursa Malaysia KLCI (FBM KLCI) is expected to rebound next week, as market leads return and anchor investors come back after the long Chinese New Year break, alongside a positive external sentiment.

Affin Investment Bank head of Retail Research Dr Nazri Khan said trading volume was expected to pick up next week, with immedi­ate support remaining at 1,600 and 1,610, while immediate resistance for rally hurdles should stand at 1,640 and 1,650 (where 20 and 50-day moving average converge).

“The FTSE Bursa Malaysia KLCI (FBM KLCI) could be form­ing a bullish inverted “head and shoulders” pattern, having already tested the 1,600 level previously on January 22 and February 7,” he told Bernama.

A head and shoulder pattern, believed to be one of the most reli­able trend-reversal patterns, is a movement of indices that peaks three times over a period of time, but at different levels.

The second peak is higher than the other two, performing a shape like a human head and shoulders.

On global development, he said Japan’s reaffirmed commitment to a massive liquidity programme, a 100 trillion yen asset purchase programme, and retaining inter­est rates unchanged would be the biggest catalyst to support market sentiment.

“We believe the Japanese expan­sive policies will flood liquidity, drive down the value of the yen and indirectly boost Asian regional markets,” he added.

He said other factors that may support the local market was the outcome of the Group of 20 (G20) Finance Ministers and Central Bank governors meeting in Mos­cow this weekend.

He said the weak data from G20 members’ economy, a contraction by 0.6 per cent in the European Un­ion’s gross domestic product (GDP) and Japan’s real GDP shrinking at an annualized rate of 0.4 per cent in the October to December quarter from the preceding three months, was expected to be the focus driver for the meeting.

“Their main agenda, which is to reduce forex volatility and produce a more coherent international economic policy to weather the financial crisis, should be receptive to the equity market,” he added.

Meanwhile, for the week-just ended, the FBM KLCI was mostly rangebound due to lack of follow-through buying after a promising start on Wednesday.

On a week-to-week basis, the FBM KLCI was up 4.13 points to 1,627.93 from 1,623.8 last Friday.

The Finance Index fell 12.3 points to 14,932.34, while the Industrial Index added 12.42 points to 2,793.64, and the Plantation Index jumped 70.3 points to 7,968.96.

The FBM Emas Index gar­nered 49.37 points to 11,069.03, the FBMT100 Index advanced 41.46 points to 10,919.54, the FBM70 Index surged 108.72 points to 12,032.8 and the FBM Ace Index increased 38.21 points to 4,070.94.

Weekly turnover declined to 2.18 billion units worth RM3.73 billion from last week’s 4.902 bil­lion units worth RM8.048 billion. — Bernama