KUCHING: The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) should not be moving too much this week from its current level, with expectations of higher share prices.
However, trading volume would remain at one billion and above, whilst rotational play will continue, according to MRR Consulting’s managing partner, Ooi Kok Hwa.
“Also, the attention will not be on blue-chip stocks – instead, it will be on second and third liners. Moreover, traders’ interest is expected to focus on small caps, especially those within the property sector,” he outlined during a telephone interview.
Last Thursday, FBM KLCI closed at 1,511.74 points, a 6.08-point higher from 1,505.66 the preceding Friday. The board ended a day earlier in conjunction with the Deepavali celebration.
Investors’ sentiments were optimistic with regards to the index hitting a new all time high of 1,530 to 1,540 in the near term.
Meanwhile, Ooi – also a certified investment adviser — underlined the recent ruling by Bank Negara that would only authorise banks to lend up to 70 per cent of the value of the residential property.
The new mortgage lending rule, applicable only to borrowers taking up a third housing loan, was slated for curbing excessive investment and speculative activities that might incur an unfavourable property price bubble.
He opined, “I do not think the LVR (loan-to-value ratio) will give much impact. Bank Negara may be able to ‘cool it down’ for a while but cannot totally stop it at a later stage.
“Top property players always know how to ‘find ways’. People who make money from the top market will almost always channel their investment into property. So, there will be no issue in terms of finding funding for these residential assets, resulting into which property price will go even higher.”
Notwithstanding this, the property sector should remain vibrant on the back of potential construction tenders and contracts under various government initiatives such as the 10th Malaysia Plan and Economic Transformation Plan.
Researchers at TA Securities Holdings Bhd rated the sector as ‘Overweight’, strengthened altogether by rising affluence against the backdrop of between five and six per cent gross domestic product growth over the next two years, as well as attractive mortgage rate at base-lending-rate minus 1.8 to 2.2 per cent.
On the emergence of Chinese companies going for listing onto the local bourse, Ooi believed that the trend for these Oriental stocks would move much in line with those in the Shanghai Composite Index and Hang Seng Index.
Last week, winemaker China Ouhua Winery Holdings Ltd debuted on Bursa Malaysia at 66 sen per share – marking it as the fifth company from China listed on the local bourse.
“They (Chinese stocks) move in momentum; if the two Chinese indexes move higher, the main interest will be focused on these Bursa-listed companies. For some of them, the direction is actually quite attractive.”