Bursa Malaysia to trade sideways next week; investors to monitor April IPI index, ECB meet

KUALA LUMPUR, June 6 (Bernama): The FTSE Bursa Malaysia (FBM KLCI) is expected to trade sideways this week with the level of resistance located at 1,600 to 1610 points.

Market players will be monitoring the country’s April industrial production index to be released by the Statistics Department and the European Central Bank’s (ECB) policy rate meeting.

Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said the holiday-shortened week would contribute further to the market lull as there seemed to be no new fresh catalyst in the market.

The local bourse will be closed on Monday, June 7, in conjunction with the official birthday of the Yang di-Pertuan Agong Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah. The local bourse and its subsidiaries will resume operations on Tuesday, June 8.

"Looking ahead next week from the domestic front, the Statistics Department will be releasing the industrial production index data for the month of April which is expected to continue to grow in line with the ongoing recovery in external demand.

"Globally, investors will be focusing on the ECB’s policy rate meeting next Thursday. The ECB must decide on the pace of bond purchases at the June 10 policy meeting, and hints from policymakers suggest there is little appetite to cut support even if the bloc is now firmly on the rebound, ” he told Bernama.

Meanwhile, SPI Asset Management global managing partner Stephen Innes said US President Joe Biden’s move to raise the number of Chinese companies blocked from US investment to 59 effective Aug 2 would impose negative impact to certain local stocks, especially in electrical and electronics counters.

"This is similar to a mini (US-China) trade war, ” he opined.

Biden had on Thursday signed an order amending a ban on US investment in Chinese companies, naming some 59 firms with ties to China’s military or in the surveillance industry, including Huawei Technologies Co and the country’s three biggest telecommunications companies.

On Friday, the local technology index declined by 1.1 per cent, a day after the announcement

"Market jitters emerged regarding demand for Malaysia's semiconductor components from China, pulling the Bursa Malaysia Technology Index down by 1.1 per cent, making it the second biggest decliner among sectoral indexes after the Bursa Malaysia Healthcare Index, ” Adam explained.

On the bright side, CGS-CIMB Securities Sdn Bhd via its note said based on FBM KLCI's historical data, the benchmark index’s performance tended to be positive in June, with an average month-on-month (m-o-m) gain of 0.3 per cent over the past 10 years, and 0.6 per cent m-o-m returns over the past 43 years.

"In June, investors' attention will be on the outcome of the US Federal Open Committee Meeting on June 15-16,18th Organisation of the Petroleum Exporting Countries (OPEC) meeting on July 1, further details on the PEMERKASA Plus stimulus package and the impact of the Full Movement Control Order from June 1-14, and Malaysia’s Gross Domestic Product, ” it said.

Globally, investors will be monitoring the number of new Covid-19 cases in India and globally, and the rollout of COVID-19 vaccination and distribution programmes.

Also in focus will be the 10-year US Treasury yield rate movements.

Health director-general Tan Sri Dr Noor Hisham Abdullah tweeted on Friday that Malaysia recorded 7,748 new COVID-19 cases over the past 24 hours, bringing the total number of cases in the country to-date to 515,571.

In the trading week just ended, the FBM KLCI moved between 1,568.47 (on Monday ahead of the full lockdown) and 1,599.72 (on Thursday).

The index narrowed 15.99 points to 1,578.45 at Friday’s close from 1,594.44 a week earlier.

Bursa Malaysia finished this week in red territory with losses led by healthcare-linked counters. The healthcare-linked counters tumbled after the country’s vaccination programme kicked into high gear with the the highest number of daily doses administered on Friday.

However, the FBM KLCI benefited from the crude oil hitting its highest price since October 2018.

On a Friday-to-Friday basis, the FBM Emas Index was 60.70 points lower at 11,517.80, the FBMT 100 Index declined 71.02 points to 11,205.58, the FBM Emas Shariah Index erased 118.74 points to 12,728.30 and the FBM ACE fell 43.58 points to 7,800.30, but the FBM 70 strengthened 70.26 points to 14.939.91.

Sector-wise, the Financial Services Index slipped 22.45 points to 15,144.68, the Plantation Index contracted 138.66 points to 6,769.80 and the Industrial Products and Services Index inched up 0.29 of-a-point to 193.38.

The Energy Index shed 18.91 points to 844.69, the Healthcare Index gave up 68.32 points to 3,066.07 and the Technology Index lifted 1.78 points to 80.76.

Weekly turnover rose to 36.95 billion units worth RM19.82 billion from 30.51 billion units worth RM18.84 billion recorded in the previous week.

Main Market volume improved to 24.2 billion shares valued at RM16.35 billion from 16.84 billion shares valued at RM14.96 billion.

Warrants volume advanced to 1.64 billion units worth RM180.66 million from 944.87 million units worth RM104.14 million.

The ACE Market volume, however, went down to 11.10 billion shares valued at RM3.55 billion from 12.71 billion shares valued at RM3.75 billion. - Bernama

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