KUALA LUMPUR, June 13 — Bursa Malaysia is expected to continue its correction mode to trade with a downside bias next week.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the FBM KLCI correction is expected as the price-earnings multiples are quite stretched and on the upside while the index level had been hovering at an overbought region.

He noted that Bursa Malaysia had corrected considerably this week after a sharp rebound in the past weeks.

"Currently, the resistance and support levels stand at 1,580 and 1,510 points respectively. The 200-day simple moving average stands at 1,516 points.

"Therefore, the downside risk for FBM KLCI is quite visible in the immediate term,” he told Bernama.

He added that Bank Islam is still maintaining its year-end target at 1,500 points, believing the correction is necessary to reflect the fundamentals.

Overall, for the week just ended, the movement of Bursa Malaysia was seen to be mainly tracking the movement of regional peers while taking the cue from Wall Street’s performance.

Afzanizam said the recent decision by the US Federal Open Market Committee (FOMC) to keep rates steady until 2022 suggests that the economic uncertainties are very much visible and have affected market sentiment.

"The FOMC stance shows the extent of economic uncertainties is fairly sizeable. At the current juncture, there is no vaccine, and therefore the risk of a possible relapse in new Covid-19 infections is always a possibility,” he said.

On another note, a dealer said the measures announced under the National Economic Recovery Plan (Penjana) had provided some impetus to the market early in the week.

However, the Fed’s projection of a sluggish economic outlook, coupled with renewed fears of a Covid-19 second wave due to the rising number of new cases, will further dampen global growth, sending chills to the markets and undermining market optimism

On top of that, Malaysia’s recent Industrial Production Index (IPI), which recorded an all-time low of 32 per cent in April, had also resulted in jitters in the local market, he added.

On a Friday-to-Friday basis, the index slipped 10.31 points to end at 1,546.02.

On the scoreboard, the FBM Emas Index reduced 61.63 points to 10,869.15, the FBMT 100 Index shed 60.47 points to 10,731.77 while the FBM Emas Shariah Index improved 10.09 points to 12,317.19.

The FBM 70 declined 26.69 points to 13,362.15 and the FBM ACE Index eased 23.86 points to 5,828.67.

Sector-wise, the Industrial Products and Services Index edged up 0.53 point to 139.58, the Plantation Index was 0.98 point easier at 6,786.04, and the Financial Services Index dropped 315.82 points to 13,410.2.

Weekly turnover decreased to 33.89 billion units worth RM21.59 billion from 46.04 billion units worth RM32.19 billion in the previous week.

Main Market volume fell to 19.83 billion shares worth RM17.82 billion against 26.91 billion shares worth RM16.95 billion previously.

Warrants turnover slipped to 2.76 billion units worth RM728.97 million compared with 3.22 billion units worth RM885.64 million the week before.

The ACE Market volume reduced to 11.30 billion shares worth RM3.04 billion versus 15.89 billion shares worth RM5.66 billion previously.

The market was closed on Monday, June 8, in conjunction with the birthday of the Yang di-Pertuan Agong. — Bernama