KUALA LUMPUR: The FTSE Bursa Malaysia Kuala Lumpur Ccomposite Index (FBM KLCI) is expected to trend steadier next week on positive sentiment arising from the higher-than-expected fourth quarter (4Q) gross domestic product (GDP) growth of 5.1 per cent announced recently, dealers said.
Affin Investment Bank vice-president and head of Retail Research Dr Nazri Khan said the announcement underlines the constant growth trajectory in the country’s economic progress.
“After dipping unexpectedly to 4.1 per cent in 1Q of 2013, the economy bounced back to 4.4 per cent (2Q), five per cent (3Q) and 5.1 per cent (4Q).
“The benchmark index has reversed the January decline to close 2.4 per cent higher (week-on-week), only about three per cent down from a record high struck at the 1,882 level, even as the ringgit fell sharply to 3.345 last week,” he told Bernama.
On the global economic front, Nazri said the FBM KLCI should regain upside momentum and track more upswings on Wall Street, on the dovish Federal Reserve chairwoman Janet Yellen’s testimony and positive global economic data.
“This is despite having the latest bout of the Italian political turmoil.
“Also helping overall market sentiment is news that the US will not face another bout of debt ceiling brinkmanship for the time being.
“Congress has voted to raise the government debt ceiling until March 2015,postponing any future showndowns until after the November mid-term elections,” he added.
He also said that investors should welcome positive evidence from China suggesting that global demand was stronger than previously thought.
“We expect positive China economic data (better than expected Trade Balance & Inflation data) and perceived Janet Yellen dovishness to lift equity and commodity prices near term,” he added.
On the technical front, he said the local bourse showed an impressive week on week price rebound due to a short-term oversold position and stronger external front.
“The FBM KLCI has survived an important test of 200-day moving average on good volume and showed staying power.
The local benchmark only needs to clear the 50-day moving average lines to signal that the January correction has run its course.
“We reiterate that the KLCI remains above its monthly uptrend level and thus is in a secular bull market. That means any significant periods of weakness this year should be viewed as strong buying opportunities,” he said.
On a week-to-week basis, the FBM KLCI increased 10.78 points to 1,819.37 points, the Finance Index weakened 13.97 points to 16,553.12 points, the Industrial Index gained 17.9 points to 3,097.91 points and the Plantation Index jumped 150.95 points to 8,548.63 points.
The FBM Emas Index rose 103.74 points to 12,584.24 points, the FBMT100 Index grew 78.45 points to 12,266.13 points, the FBM Ace was 151.64 points higher at 6,302.8 points and the FBM 70 was 110.8 points better at 13,811.36 points. — Bernama
FBM KLCI
The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) futures contract on Bursa Malaysia Derivatives is expected to trade firmer next week, tracking the cash market’s bullish performance.
Affin Investment Bank vice-president and head of Retail Research Dr Nazri Khan said the FBM KLCI would likely extend gains next week on the positive domestic and global economic outlook.
On the local front, he said the market should react well to the higher-than-expected fourth quarter gross development product (GDP) growth of 5.1 per cent, announced recently.
“Also helping overall market sentiment is news that the United States will not face another bout of debt ceiling brinkmanship for the time being.
Congress has voted to raise the government debt ceiling until March 2015,postponing any future showndowns until after the November mid-term elections. For the week just-ended, the underlying FBM KLCI was 2.22 points higher at 1,819.37. — Bernama
KLIBOR
The three-month Kuala Lumpur Interbank Offered Rate (Klibor) futures contract on Bursa Malaysia Derivatives is expected to remain quiet next week amid a lack of trading direction, a dealer said.
He said interbank rates in the cash market would remain flat after Bank Negara Malaysia left the overnight policy rate unchanged.
“The market has been quiet for some time, awaiting potential market-moving events,” he added.
For the week just-ended, the market was untraded throughout with the open interest unchanged at 3,895 contracts. — Bernama