Investors seek safe-haven assets like gold

File pic of Bursa Malaysia screens. CIMB lowered its end-2015 target for the KLCI to 1,700 from 1,800.

PETALING JAYA: Investors sought a safe haven in gold and US Treasuries, as stock markets in the region took a breather due to jitters arising from geopolitical concerns in North Korea and Syria.

Gold traded higher yesterday at US$1,290 per ounce, the level last seen on Nov 9 last year, while 10-year US Treasuries yields hit their lowest level since mid-November.

The yen was the top-performing currency in the region for this month, as investors sought safe-haven assets.

Bursa Malaysia was among the three stock markets in Asia that ended in positive territory yesterday.

Bursa’s leading indicator, the FBM KLCI, closed higher by 2.94 points or 0.17% to 1,733.93, led by banking and consumer product counters.

Meanwhile, penny stocks continued dominating the top-volume list on Bursa Malaysia.

Japan’s Nikkei 225 and South Korea’s Kospi rose by 0.11% and 0.51%, respectively.

Malaysia’s major trading partner China posted better-than-expected economic growth.

China saw its economy grow by 6.9% in the first quarter, slightly faster than expected, supported by a Government infrastructure spending spree and a frenzied housing market that is showing signs of overheating, Reuters reported.

Last week, foreign investors remained net buyers on Bursa although in smaller values, while the market weakened.

According to MIDF Research, foreign investors’ net purchase of Malaysian equities fell to RM239.9mil last week, a 63% decline from RM645.3mil the week before.

“Year-to-date, the cumulative foreign purchase amounted to RM6.63bil... foreign participation on Bursa in general eased last week,” the research house said yesterday.

MIDF said Kuala Lumpur Kepong Bhd saw the highest money inflow of RM14.32mil last week, followed by Nestle Malaysia Bhd and UMW Holdings Bhd.

Despite the positive start for the week, analysts remained cautious on the market, especially with fresh uncertainty over Wall Street’s corporate earnings and geopolitical concerns.

Kenanga Research said the underlying outlook of the FBM KLCI had turned lacklustre, further opining that the benchmark would embark on a tepid week ahead.

“It will look to test the sustainability of its immediate support level of 1,727 points,” it said.

The expectation of a softer local market is in line with the overall global equity market, with investors buying safe-haven assets such as gold.

“It is to be expected, as the global equity market is currently on consolidation mode, and trading had been disrupted by closures in a few markets,” MIDF said.

Hong Leong Investment Bank reckoned that although volatility is expected to remain, a firmer ringgit against the US dollar and oil prices would help to cushion any heavy selldown in the local stock market.

The ringgit, along with several regional currencies, continued to strengthen against the US dollar yesterday from last Friday.

“We reiterate that the near-term KLCI outlook remains dim unless it can swiftly regain its composure above the support trend line near 1,747,” it said in a report yesterday.