Bursa Malaysia to trade in cautious mode next week

KUALA LUMPUR, Jan 30 — Bursa Malaysia is expected to continue to trade in a cautious mode next week, driven by mixed sentiments on the regional and global economic outlook.

Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said the local market was expected to see thin trading amid the holiday-shortened week, which will see the FTSE Bursa Malaysia KLCI (FBM KLCI) trading within a tight range.

The current resistance level is spotted at 1,600 points while the immediate support level stands at 1,560 points, he said.

“Additionally, the overall sentiment would be somewhat dampened following fresh geopolitical tensions after China warned Taiwan that an attempt to seek independence from China could mean war,” he told Bernama.

He said Moody’s Investors Service’s announcement on Thursday, wherein it reiterated a stable rating outlook for Malaysia, could boost investors confidence in the nation’s fiscal management.

Back in December, Fitch Ratings downgraded Malaysia’s rating.

“So, the latest rating is like a testament to the government’s management of its fiscal position,” said Adam.

On the other hand, he said the rise in today’s Covid-19 cases to record high could continue to attract interest in rubber glove counters which make up 10-13 per cent in terms of FBM KLCI’s market capitalisation.

“But, any surprise move to extend the movement control order (MCO) further could see some knee-jerk reaction in the market,” he added.

Meanwhile, Adam said restrictions over retail trading of stocks like GameStop and talks surrounding the further development of the US fiscal stimulus in the Senate also affected the mood in Asia.

“In fact on Bursa, rubber glove counters were firing on all cylinders amid a call on social media to take on short sellers. The concern was that the share prices, particularly of glove companies, have dropped in recent months despite the increasing profits reported by these firms.

“As such, glove counters were in high demand on Friday, pushing share prices sharply higher thanks to the calls made by some unknown investors over social media to take on the short sellers,” he added.

Despite the hefty gains in the major rubber glove counters, he said other stocks were mostly in the red amid fears that retail investors may want to enter other stocks which are part of the composite index.

On the forex market, he said the ringgit was 0.1 per cent higher against the US dollar amid Moody’s reiteration of a stable rating outlook for Malaysia.

“Aside from that, the US dollar is facing pressure amid nervousness that crept into the greenback following trading restrictions on GameStop shares.

“Looking ahead, the ringgit could appreciate further against the greenback to reach 4.03 per US dollar next week if there are positive developments regarding the vaccine roll-out,” he said.

On a Friday-to-Friday basis, the benchmark FBM KLCI slipped 30.34 points to 1,566.44 from last week’s 1,596.74.

On the scoreboard, the FBM Emas Index decreased 199.81 points to 11,363.81, the FBMT 100 Index slid 189.83 points to 11,104.93, the FBM 70 declined 154.34 points to 14,747.34, the FBM Emas Shariah Index eased 861.09 points to 12,187.86 and the FBM ACE Index rose 274.93 points to 11,032.94.

Sector-wise, the Financial Services Index was down 421.54 points to 14,464.06 and the Industrial Products and Services Index inched down 8.16 points to 169.19, while the Plantation Index dropped 125.27 points to 7,097.89.

The Energy Index decreased 40.93 points to 793.14, the Healthcare Index was 48.06 points higher at 3,597.85 and the Technology Index increased 1.32 points to 81.96.    

For the holiday-shortened week, weekly turnover decreased to 25.57 billion units worth RM21.23 billion from 33.18 billion units worth RM22.61 billion in the previous week.

Main Market volume eased to 15.34 billion shares valued at RM17.64 billion from 18.94 billion shares valued at RM17.51 billion previously.

Warrants turnover rose to 2.04 billion units worth RM320.29 million from 1.98 billion units worth RM315.38 million in the previous week.

The ACE Market volume slipped to 8.19 billion shares valued at RM3.26 billion from 12.25 billion shares valued at RM4.78 billion previously. — Bernama