Expect a quiet equity market next week, FBM KLCI to retest 1,700 level

02 Feb 2019 / 10:09 H.

KUALA LUMPUR: Bursa Malaysia is expected to be quiet next week following the shortened trading week and with most investors likely absent ahead of the Chinese New Year celebration, analysts said.

Rakuten Trade Sdn Bhd head of research Kenny Yee said the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) may also retest the 1,700 level next week in line with the positive market sentiment on Wall Street and regional markets.

“We saw during the week ended, smaller caps performing quite well and expect this to continue, backed by the positive inflow of foreign funds which recorded over RM900 million year-to-date.

“However, we also need to see how investors react to the outcome of the US-China trade negotiations,” Yee told Bernama.

Another analyst, Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew said February would see some seasonal corporate earnings results for the period ended Dec 31, 2018, which may be lacklustre, gauging from the majority of results released on Jan 29-30.

“Much of the corporate earnings recorded a decline due to a higher price-earnings (PE) ratio, which made stock prices more expensive.

“This also means that the share price was expensive compared with earnings per share. Earnings are not growing at par with the share price level,” he added.

However, he hoped there would be a reversal of fortunes among the listed companies in the forthcoming seasonal results.

Pong also commented that foreign participants recording a net inflow of RM1.2 billion into the country since Jan 9, was encouraging.

“This will help the equity market as foreign players are viewing emerging markets (EM) such as Malaysia to be attractive again.

“EM’s are fast becoming a global growth point and profits tends to grow faster. Even when EM’s bottom out, they can recover quickly. Besides, they are cheaper than the US markets,” he said.

Pong expects the FBM KLCI to rally between 1,720-1,730 with a limited downside as the composite index is still trapped within a narrow range and support is seen at the 1,650 level.

For the week just ended, the local bourse recorded a modestly low pattern, mainly influenced by external factors such as the trade talks between China and the US, the US Federal Reserve interest rates decision as well as slower growth of the Chinese economy.

The lower index was partially offset by the higher oil prices and positive foreign funds inflow.

On a Thursday-to-Friday basis, the benchmark FBM KLCI settled 17.50 points lower at 1,683.53.

The market was closed on Friday for the Federal Territory Day.

The FBM Emas Index was 125.34 points weaker at 11,660.62, the FBMT 100 Index decreased 123.65 points to 11,545.21 and the FBM Emas Shariah Index slid 173.12 points to 11,552.61.

The FBM 70 lost 163.08 points to 13,817.21 and the FBM Ace Index slipped 62.35 points to 4,402.10.

Sector-wise, the Financial Services Index dropped 121.56 points to 17,514.97, the Plantation Index shed 21.93 points to 7,280.24, and the Industrial Products and Services Index gave up 3.08 points to 161.11.

On a Thursday-to-Friday basis, the weekly turnover declined to 8.77 billion units worth RM8.13 billion against 10.23 billion units valued at RM8.22 billion.

Main Market volume decreased to 6.32 billion units valued at RM7.66 billion versus 7.60 billion units worth RM7.75 billion.

Warrants turnover marginally rose to 1.38 billion units worth RM301.90 million from 1.37 billion units valued at RM251.08 million.

The ACE Market volume was lower at 1.05 billion shares valued at RM152.46 million against 1.34 billion shares worth RM217.37 million.

The gold futures contract on Bursa Malaysia Derivatives is expected to trade higher next week as a weaker US dollar would help lift sentiment for the precious metal globally.

Speaking to Bernama, a dealer said the greenback would extend its losses next week following US Federal Reserve’s dovish stance, indicating its interest rate hike cycle could now be over.

On Wednesday, the Federal Open Market Committee decided to keep its key interest rates on hold after raising them four times last year.

For the shortened week just ended, the local gold futures market traded higher.

Comparing to last Friday, spot month January 2019 settled 69 ticks higher at RM173.95 a gramme on Thursday, while February 2019, March 2019 and April 2019 rose 40 ticks each to RM172.50, RM173.00 and RM173.10 a gramme, respectively.

The local market was closed on Friday for the Federal Territory Day.

Weekly turnover remained nil, while open interest was pegged at 23 contracts. — Bernama

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