KUALA LUMPUR: Malaysia’s equity and foreign exchange markets have begun their uptrend, albeit at a slow pace, tracking the positive sentiment, globally, and the trend is likely to continue next week, according to economists.
The FBM KLCI gained 11.05 points or 0.66 per cent to close at 1,678.88 on Thursday and rose 4.34 points on Friday to end at 1,683.22 aided by buying interest in penny stocks and selected heavyweights.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said between Monday and Thursday, foreign funds offloaded RM81.2 million, and were generally net sellers.
However, net inflow of RM16.4 million was noted on Wednesday and another RM64.6 million on Thursday, suggesting foreign funds were constructive on these two days.
“The positive inflow was spurred by the contents of the recent minutes of the US Federal Open Market Committee meeting which indicated that the Fed was adopting a more dovish stance in raising interest rates,” he told Bernama, adding that the central bank had become increasingly mindful that a gradual hike had a better impact on the economy.
Mohd Afzanizam also said the mid-level discussions between the US and China which was extended by three days indicated a positive development, hence adding to the already positive sentiment worldwide.
Going forward, he said the progress of the discussions between the two countries was key to market sentiment and, should the positive sentiment continue, the FBMKLCI could approach its resistance level of 1,700 points.
For the week just-ended, both these factors aided market sentiment with the benchmark FBM KLCI, on a Friday-to-Friday basis, settled 13.44 points higher at 1,683.22.
On the corporate front, companies linked to former Tourism Malaysia chairman Datuk Siew Ka Wei continued to slide following his four-day remand by the Malaysian Anti-Corruption Commission.
On January 9, Ancom Bhd declined 2.5 sen to 44.5 sen, Ancom Logistics Bhd shed half-a-sen to 8.5 sen and Nylex (M) Bhd eased two sen to 61 sen.
Siew is the executive chairman of Ancom, executive vice-chairman of Ancom Logistics and group managing director of Nylex.
Meanwhile, Petronas Chemicals Group Bhd (PetChem) emerged among the top losers, giving up 20 sen or 2.3 per cent on Jan 10. The counter traded at RM8.50 with 2.02 million shares transacted.
For the week ahead, among the stocks to be watch include Scomi Energy Services Bhd (SESB), which has initiated investigations into a RM64.33 million loan given to its parent company, Scomi Group Bhd, which is said to be advances made without the approval of SESB’s board of directors.
The advances has dragged SESB into deeper financial trouble as Scomi Group, which holds a 65.64 per cent stake in SESB, has not been able to repay the outstanding amount.
The ringgit, on the other hand, is expected to continue its upward momentum next week on anticipated stronger buying interest as the US Federal Reserve pauses its rate tightening cycle in 2019.
OANDA Asia-Pacific head of trading Stephen Innes said the US dollar had weakened, as a result of the Fed’s latest stance, but the greatest beneficiary was the ringgit which finished on Friday at 4.0940/0980 against the greenback versus 4.1340/1370 on Jan 4.
“Ringgit-denominated bonds are in demand as the currency has breached the key level of 4.10 against the US dollar.
”Indeed, the stars are aligned for the ringgit. The dovish Federal Reserve, weaker US dollar and rising oil prices are suggesting that the local unit could extend its gains to the next critical support level around 4.0750,” he added. — Bernama