KUALA LUMPUR (Nov 18): Bursa Malaysia’s Barometer index is expected to test the 1,480 mark next 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.
On Wednesday, Bursa Malaysia rose to a more than 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 hike cycle .
However, the market failed to sustain its rally as profit-taking occurred on Thursday.
“The key index managed to stay above the psychological level of 1,450 at the end of the day. The rally was also accompanied by stronger regional indices, despite tensions in the Middle East and Palestine and ongoing problems in the real estate sector in China,” he said.
Similarly, Thong Pak Leng, vice president of equity research at Rakuten Trade, also believed that the local market could potentially turn positive due to the continued net inflow from foreign funds, which reached more than RM1 billion so far this month, and the strong fundamentals of the local 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.
On 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 Malaysia governor Datuk Abdul Rasheed Ghaffour expected the domestic economy to grow by about 4% in 2023 and 4% to 5% in 2024 despite the challenging global environment.
“Given the rising exponential moving averages, we expect the bullish trend to continue in the short term. If the FTSE Bursa Malaysia KLCI (FBM KLCI) manages to cross the resistance threshold of 1,465 again, we expect further upside potential,” said Thong. The benchmark index is expected to move between 1,450 and 1,470 in the coming week, with a support at 1,430.
Next week, investors will be closely watching Tuesday’s release of minutes from the Federal Reserve’s Federal Open Market Committee meeting from Oct. 31 to Nov. 1, which could provide a new perspective on global economic developments.
In addition to the weekly jobless claims, the US manufacturing and services purchasing managers’ index will also be released later this week.
From Friday to Friday, the FBM KLCI rose 15.49 points to end the week at 1,460.67 compared to 1,445.18 a week earlier.
On the index board, the FBM Emas Index climbed 108.51 points to 10,799.98, the FBMT 100 Index was 108.91 points stronger to 10,462.50, the FBM Emas Shariah Index rose 107.57 points to 11,004.74, the FBM 70 Index jumped 140.15 points to 14,302.0 8, and the FBM ACE Index rose 39.29 points to 5,171.94.
By sector, the financial services index rose 86.57 points to 16,382.64, the plantation index rose 84.45 points to 7,006.74, the industrial products and services index rose 1.52 points to 173.92, while the energy index increased 6, lost 84 points to 852.50.
Bursa Malaysia ended the shortened trading week with lower weekly turnover of 13.78 billion units worth RM7.93 billion compared to 17.0 billion units worth RM10.04 billion in the previous week.
Volume on the main market shrank to 8.93 billion shares worth RM6.8 billion from 11.29 billion shares worth RM8.78 billion the previous week.
Warrant turnover improved to 2.11 billion units valued at RM291.87 million, compared to 1.90 billion units valued at RM264.22 million last week.
The ACE market volume fell to 2.71 billion shares worth RM835.79 million from 3.73 billion shares worth RM984.0 million previously.
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