KUALA LUMPUR: Bursa Malaysia is likely to see a more bearish trade next week as players reprice assets to reflect a riskier environment with Germany being the latest casualty to affect global growth, an analyst said.
They expect risk aversion and eroding global investors confidence with most punters anticipating higher inflation and lower growth to cause sooner rather than later global recession, he added.
“Going forward, we expect the FBMKLCI to continue sliding down to test the lower 1,450 support level,” Affin Investment Bank head of retail research, Dr Nazri Khan told Bernama.
He said the bearish catalysts would be the weak US economic data, including the expectation of weaker retail sales and reports of anticipated weaker business climate in Germany.
“Global stocks are to be dragged by the European banking stocks which became the centre of sell off last week,” he said, adding that this suggested a serious liquidity weakness in the European interbank market and more fears about the funding of European banks.
Nazri also did not rule out the possibility that the European temporary short-selling ban may have contributed to the sell-off with investors unable to hedge equity risk and roll forward their contracts.
On a positive note, he said the current bearishness in the US and European markets were also positive catalysts for emerging markets with more investors looking at Asia as an alternative floatation venue.
He said the plunge in global equities would likely benefit Malaysia as investors seek out Islamic bonds and more solid syariah compliant banking stocks for alternative investment strategy.
“The recent challenges faced by initial public offerings in many developed markets have already led some western companies to do listings in Asian markets, such as Manchester United, Prada, Samsonite that sought dual listing in Hong Kong and Singapore.
“Despite the potential sell down, the local market is fundamentally more resilient now with most local stocks having stronger balance sheets, higher cash and anticipating more positive upgrades,” he said.
For the week just ended, the market started firmer and climbed to the 1,500-point psychological level on technical rebound but fell back below psychological level on Friday due to profit taking.
The FBM KLCI dropped 117 points or by 7.3 per cent since the mid July peak near 1,600 level.
On a Friday-to-Friday basis, the FBM KLCI increased 0.31 of a point to 1,483.98 from 1,483.67 previously.
The Finance Index rose 68.25 points to 14,140.99, Industrial Index went up 30.88 points to 2,745.89 and the Plantation Index added 30.68 points to 7,239.13.
The FBM Emas Index rose 10.86 points to 10,157.96, FBM Ace increased 31.98 points to 3,826.07 and FBM70 went up 47.71 points to 11,099.91.
Total weekly volume decreased to 5.067 billion units worth RM8.921 billion from 7.776 billion units valued at RM14.682 billion previously.
The Main Market turnover fell to 3.853 billion units worth RM8.727 billion from 6.135 billion units valued at RM14.448 billion last Friday.
Volume on the ACE market dropped to 808.225 million shares valued at RM138.994 million from 1.033 billion shares worth RM162.075 million last week.
Warrants decreased to 390.381 million units worth RM46.624 million from 586.675 million units valued at RM64.915 million previously. — Bernama