PETALING JAYA: Bursa Malaysia’s Barometer Index is set to test the 1,480 mark this week on bullish year-end seasonality and strength in global equities.
Datuk Dr. Inter-Pacific Asset Management Bhd chief economist and fund manager Nazri Khan said expectations of a pause in interest rate hikes due to cooling U.S. inflation data are also likely to further boost risk appetite for stocks.
“The more favorable inflation readings will fuel speculation that central banks, including the US Federal Reserve (Fed), the European Central Bank and the Bank of England, have completed rate hikes,” he told Bernama.
The Fed kept its key interest rate stable at a 22-year high earlier this month.
“Currently, futures markets assessed the likelihood of the central bank raising interest rates at its next policy meeting in December as low.
“Investors also advanced their estimates of when the Fed would begin cutting interest rates, with investors pricing in two 0.25 percentage point rate cuts by July,” he noted.
Last Wednesday, Bursa Malaysia rose to more than an eight-month high after U.S. inflation unexpectedly slowed to 3.2% in October versus an estimate of 3.3%, reinforcing bets that the Fed has already completed its rate-hiking cycle .
However, the market failed to sustain its rally as profit-taking occurred last Thursday.
“The leading index was able to stay above the psychological mark of 1,450 at the end of the day. The rally was also accompanied by stronger regional indices, despite tensions between the Middle East and Palestine and China’s ongoing problems in the real estate sector,” he said.
Similarly, Thong Pak Leng, vice president of equity research at Rakuten Trade, also believed that the local market may turn positive due to the continued net inflow from foreign funds, which reached more than RM1 billion so far this month, and the local market’s strong fundamentals could The economy will drive the market in the future.
“Technically, the benchmark index broke the crucial resistance level of 1,465 on November 15 but fell back in subsequent sessions as prevailing domestic sentiment was towards profit-taking after the recent robust rally,” he said.
Last Friday, Malaysia reported economic growth of 3.3% in the third quarter, up from 2.9% in the second quarter, supported by robust domestic demand.
Bank Negara governor Datuk Abdul Rasheed Ghaffour expected the domestic economy to grow by about 4% in 2023 and between 4% and 5% in 2024 despite the challenging global environment.
“With the exponential moving averages rising, we remain of the view that the bullish bias is here to stay in the short term. “If the FBM KLCI manages to cross the 1,465 resistance threshold again, we expect further upside potential,” Thong said, adding that it is expected to move between 1,450 and 1,470 in the coming week, with support at 1,430.
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