Bursa Malaysia likely to trade lower next week

KUALA LUMPUR: Bursa Malaysia is expected to trade lower next week as the market continues to react to the protectionist policy of the United States (US) .
Affin Hwang Investment Bank Vice-President/ Head of Retail Research, Datuk Dr Nazri Khan Adam Khan, said selling pressure caused by US action is expected to continue in the near-term and would affect not just Malaysia, but regional, European and US stock markets.
"There will be more selling pressure in the near term. The market will experience a slight pullback next week," he told Bernama.
He said the support level for next week would be at 1,850, while resistance is set at 1,880.
US President Donald Trump signed a presidential memorandum on Thursday that could impose tariffs of up to US$60 billion on imports from China and restrictions aimed at preventing Chinese-controlled companies and funds from acquiring US firms with sensitive technologies.
Nazri Khan, is however, optimistic that the geopolitical tensions caused by the US action would be temporary and diplomatic negotiations would take place between the US and China.
"Looking back at geopolitical tensions, it is usually temporary. A global trade war is usually just temporary and rhetoric. I'm sure there will be diplomatic negotiations," he said.
He said the predicted pullback on the equity market next week would present an opportunity for investors to buy on dip.
According to Nazri Khan, the market fundamentals remained intact with commodity prices continuing to rise, and economic indicators still being positive.
"The global economy is moving up, Malaysia's gross domestic product was up and international reserves are strong. Commodities are also still strong as per crude oil, gold and crude palm oil. So, I think it won't be that bad," he said.
On a Friday-to-Friday basis, the FBM KLCI was 19.16 points better at 1,865.55 from 1,846.39.
The FBM Emas Index rose 27.02 points to 13,060.66 and FBMT100 Index increased 62.45 points to 12,844.52, but the FBM Emas Syariah Index decreased by 21.35 points to 13,198.82.
The FBM 70 fell 154.56 points to 15,538.93 and the FBM Ace slid 243.09 points to 5,681.92.
On a sectoral basis, the Industrial Index was down 30.31 points to 3,240.42, while the Finance Index surged 170.85 points to 18,209.03 and the Plantation Index jumped 92.2 points to 8,048.7.
Weekly turnover fell to 10.62 billion units worth RM10.41 billion from 12.44 billion units worth RM13.19 billion.
Main market volume declined to 6.98 billion shares valued at RM9.8 billion from 8.12 billion shares valued at RM12.49 billion.
Warrants turnover decreased to 1.63 billion units worth RM296.74 million from 1.88 billion units worth RM274.1 million.
The ACE market contracted to 1.97 billion shares valued at RM309.88 million from 2.4 billion shares valued at RM419.23 million.
Gold futures contracts on Bursa Malaysia Derivatives are likely to see a bullish trend next week on escalating tensions surrounding the trade war between the US and China, a dealer said.
Phillip Futures Sdn Bhd Dealer, Ong Su Ling, said trade tensions had created uncertainties in the market, which would boost demand for safe-haven assets such as gold.
"The trade war can also potentially affect global growth and hence, is likely to drag risk appetite further," she told Bernama.
Meanwhile, FXTM Research Analyst Lukman Otunuga said gold bulls were back in action on Friday, thanks to a vulnerable US dollar and a sell-off in global equity markets.
"It has certainly been an incredible trading week for the yellow metal, as heightened fears of a global trade war accelerated the flight to safety.
"With risk aversion in the air and the dollar under pressure, gold has the potential to appreciate further," he said.
On a Friday-to-Friday basis, March 2018 rose 31 ticks to RM168.35 a gramme, while April 2018, May 2018 and June 2018 increased 44 ticks each to RM169.25, RM170 and RM170 respectively.
Weekly turnover fell to 18 lots worth RM300,000 from last week's 23 lots valued at RM349,310, while open interest widened to 80 contracts from 79 contracts previously. — Bernama