KUALA LUMPUR: The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) is expected to stage a further rebound next week following the global stock market recovery and European optimism, a dealer said.
The rebound will be driven by the unexpected dovish policy of the Bank of England and European Central Bank, easing credit concerns in China and hopes that the US Federal Reserve may hold back from reducing stimulus.
Affin Investment Bank vice-president and head of Retail Research Dr Nazri Khan said Bursa was resilient despite mounting political tensions in Portugal, deepening unrest in Egypt and fresh uncertainty over the outlook for China’s economy and thin Wall Street session.
“This was largely due to incoming foreign inflows and safe haven play which helped local investors to shrug off negative economic news elsewhere,” he told Bernama.
He said the two biggest risks next week will be primarily political with concern from the deepening political crisis in Egypt and Portugal pushing the oil price and borrowing costs sharply higher if things run out of control.
However, going forward, Nazri said he believed significant investor focus now will shift to the US economic data especially the payroll and inflation report, which might provide a fresh steer to the market’s view on when the Fed might start to taper its monthly asset purchases.
On the technical front, the intermarket picture suggests FBM KLCI gaining some upside momentum and its success to hold above the 1,760 level should add more technical power to the bulls.
For now, the near-term trend in Bursa supports the bulls, with the next target coming in at the 1,780 and 1,800 psychological levels.
“On the domestic front, despite the stormier outlook, we believe local equities still stand up among portfolio investors with support from improving economic growth from rising exports and external demand.
“We are recommending traders to capitalise on the momentum and leadership shown by trading service sector which may rebound further amidst stronger economic recovery after a deep correction in the past five weeks,” he said.
On a Friday-to-Friday basis, the FBM KLCI eased 1.2 points to 1,772.27 compared with last Friday’s close of 1,773.54.
The Finance Index rose 59.2 points to 16,994.199, the Industrial Index inched up 7.8 points to 3,000.37 and the Plantation Index gained 49.1 points to 8,412.630.
The FBM Emas Index rose 51 points to 12,355.95, the FBMT100 Index added 20.5 points to 12,101.21, the FBM Mid 70 Index edged up 144 points to 14,252.55 and the FBM Ace Index increased 90 points to 4,774.81.
Weekly turnover slipped to 6.32 billion shares worth RM9.01 billion, compared to last week’s 7.52 billion shares worth RM12.38 billion.
Main market volume declined to 5.16 billion units valued at RM8.82 billion from 6.36 billion units valued at RM12.18 billion previously.
Warrants decreased to 120.20 million shares worth RM16.98 million versus 190.04 million shares worth RM27.23 million registered last week. The ACE market volume also firmed to 1.04 billion shares valued at RM162.44 million from 954.43 billion shares valued at RM172.28 million. — Bernama
FBM KLCI
The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) futures contracts on Bursa Malaysia Derivatives are likely to trend higher next week on positive signs of foreign inflows, dealers said.
Affin Investment Bank vice-president and head of Retail Research Dr Nazri Khan said Bursa’s resilience began in the first week of the second half of the year on a strong note largely due to incoming foreign inflows and safe haven play which helped local investors to shrug off negative economic news elsewhere.
Nazri said the local bourse once again showed resilience amid volatility and is now among the top performers in the region based on the premium valuation relative to Asean peers which is back to a near five-year average, largely due to Malaysia’s low beta market, foreign defensive inflow and domestic liquidity.
Furthermore, there are signs that Bank Negara Malaysia will hold the OPR steady at three per cent throughout 2013 and the government will delay the subsidy removal to year-end or beginning of 2014.
Under such circumstances, local equities should be well supported from greater stability of input price and cost of funds.
Furthermore, the latest data shows Malaysia having a revitalisation of investment, which will push the local gross domestic product (GDP) up to 5.4 per cent in 2014. — Bernama
KLIBOR
The three-month Kuala Lumpur Interbank Offered Rate (Klibor) futures contracts on Bursa Malaysia Derivatives are likely to remain flat next week, dealers said.
During the week, the Klibor futures market remained quiet with only one contract month traded. Turnover decreased to 320 lots from 1,300 lots last week, while open interest declined to 5,745 contracts from last week’s 6,145 contracts.
June 2013, July 2013, August 2013 and September 2013 remained at 96.81, 96.81, 96.79 and 96.77 respectively.
The underlying three-month Klibor remained unchanged for the whole week at 3.2 per cent. — Bernama