FBM KLCI to trade higher next week

KUALA LUMPUR: The FBM KLCI is likely to trade higher next week as the momentum builds up in the run-up to Budget 2018 presentation on Oct 27.

Affin Hwang Investment Bank Vice-President and Head of Retail Research Datuk Dr Nazri Khan Adam Khan said the budget was expected to lend support to the market with more allocations in the pipeline.

The FBM KLCI is expected to text the 1,780-level over the next few weeks in anticipation of a salary increase and an allowance revision for civil servants, coupled with more tax reliefs, he said, adding that these would be a big catalyst for the FBM KLCI next week and the following.

"We would also see some catalysts from the US markets. We see optimism now because of the recovery and we also see less tensions between North Korea and the US, resulting in a reduction in foreign fund outflows," he told Bernama.

Nazri Khan said higher export figure announced by the Ministry of International Trade and Industry on Friday would also lend support to Bursa Malaysia, while corporate earnings were expected to rebound.

Malaysia's exports in August 2017 rose 21.5% year-on-year to RM82.23 billion, exceeding the RM80 billion mark for the second time in 2017, while total trade expanded 22% to RM154.59 billion.

Meanwhile, the trade surplus increased to RM60.84 billion for the first eight months of 2017 compared with RM52.47 billion in the same period last year.

The FBM KLCI was mostly higher this week, taking the cue from the stronger Wall Street performance on robust US economic growth, as well as optomism over tax overhaul.

The US Bureau of Labour Statistics will release non-farm payroll data late Friday.

On a weekly basis, the benchmark FTSE Bursa Malaysia KLCI gained 8.42 points to 1,764.0 from 1,755.58 on Friday.

The FBM Emas Index increased 66.35 points to 12,597.64 and the FBMT 100 Index advanced 60.2 points to 12,249.45.

The FBM Emas Shariah Index improved 57.30 points to 12,854.67, the FBM 70 rose 80.86 points to 15,137.99 and the FBM Ace grew 96.92 points to 6,665.78.

On a sectoral basis, the Finance Index surged 135.66 points to 16,575.53, the Industrial Index added 13.87 points to 3,215.08 and the Plantation Index improved 49.27 points to 7,921.23.

Total turnover eased slightly to 12.29 billion units valued at RM9.66 billion from 12.69 billion units valued at RM11.57 billion last week.

Main Market volume fell to 7.86 billion shares valued at RM8.50 billion from 9.65 billion shares valued at RM11.05 billion.

Warrants volume declined to 734.60 million units worth RM84.73 million from last Friday's 802.06 million units worth RM79.56 million.

The ACE Market rose to 3.66 billion units valued at RM681.19 million from 2.22 billion units valued at RM442.05 million.

Gold futures contract on Bursa Malaysia Derivatives is expected to see uncertain trading next week, tracking the US Commodity Exchange's (COMEX) gold market.

A dealer said market players would be taking the cue from the September US job data announcement for further insight into the market direction.

He said the current gold environment was challenging as the dollar kept strengthening to seven-week highs, supported by the US tax reform and stronger-than-expected US services data.

"The firm US dollar pointed to solid US growth and this will support the expectations of a US interest rate hike before year-end," he said.

He added the local gold market was highly sensitive to increases in US interest rates, which could lift the opportunity cost of holding non-interest-bearing gold.

On a Friday-to-Friday basis, new spot month Oct 2017, November 2017 and December 2017 each rose 12 ticks to RM173.7, RM173.9 and RM173.9 a gramme, respectively while February 2017 added two ticks to RM174.9/g.

Weekly turnover increased to 116 lots worth RM350,620 from 100 lots worth RM1.75 million in the previous week, while open interest widened to 189 contracts from 149 contracts. — Bernama