KL shares likely to consolidate further

KUALA LUMPUR (Jan 2, 2014): Shares on Bursa Malaysia are likely to consolidate further this week driven by emerging market currency volatility, weaker ringgit and holiday profit-taking.
Affin Investment Bank Vice-President and Head of Retail Research Dr Nazri Khan said broad-based Asian sell-off on the US Federal Reserve tapering, as well as, negative reading of Chinese manufacturing data would also weigh down on shares.
"The recent combination of falling local stock prices, with the FTSE Bursa Malaysia KLCI (FBM KLCI) down 5.6%, and rising volume of 1.6 billion shares worth RM2 billion, suggests that the local stock market may be in for a deeper correction," he told Bernama.
He said the volatility should also be exacerbated by poor Chinese manufacturing data, signaling that China's economic conditions had deteriorated for the first time in six months.
On the currency turmoil, Nazri said the bank sees relative weakness as emerging markets currencies continue to fall despite a display of firepower from central banks to restore confidence.
"This is reflected by Indian, Turkey and South African central banks, which have raised interest rates, a sign of more weakness and desperation to stabilise currencies volatility," he said.
On the technical rebound, momentum studies were still bearish and deeply oversold, supporting a corrective price rebound, whereby the current price jump, from 1,780 points level, indicating that the weakness will continue.
"The market has a slightly positive tilt with FBM KLCI finishing over the 1,800 points psychological level. The next area of resistance is around 1,820 points and 1,850 points levels, while support will hit at the 1,800 points and 1,780 points levels," he said.
However, the upcoming rollout of major infrastructure projects under 2014 Economic Transformation Programme, such as the High-Speed Broadband Phase 2 and MRT lines 2, could cushion market weakness and drive investment growth momentum.
Other projects include regional development corridors, stronger pipeline of 15 initial public offerings, worth RM20 billion, this year and Petronas' RM60 billion capital expenditure plan for the Refinery And Petrochemicals Integrated Development (RAPID) project.
For the week just-ended, the stock exchange traded for half-day on Thursday and was closed on Friday for the Chinese New Year holidays. It remains closed today for the Federal Territory Day holiday.
On a week-to-week basis, the FBM KLCI increased 1.46 points to 1,804.03, the Finance Index lost 3.41 points to 16,408.68, the Plantation Index slipped 67.24 points to 8,428.94 and the Industrial Index gained 20.52 points to 3,078.49.
The FBM Emas Index dipped 12.02 points to 12,456.34, the FBMT100 Index fell 5.42 points to 12,175.86, the FBM Ace was 34.53 points easier at 5,903.98 and the FBM 70 slid 65.32 points to 13,761.05.
Weekly turnover depreciated to 5.253 billion shares, worth RM7.658 billion, from 6.139 billion shares, worth RM6.627 billion, recorded last week.
Main market volume fell to 4.33 billion shares, valued at RM7.401 billion, from 4.71 billion shares, valued at RM6.23 billion, registered previously.
Warrants turnover contracted to 157.834 million units, worth RM14.741 million, from last week's 620.63 million units worth RM14.58 million.
The ACE market volume eased to 749.554 million shares, worth RM231.635 million, from 1.254 billion shares, valued at RM363.11 million, last week. – Bernama