KUALA LUMPUR, March 5 (Bernama): Investors are expected to become more cautious this week as bets about Bank Negara Malaysia’s (BNM) Overnight Policy Rate (OPR) will be in focus ahead of the Monetary Policy Committee’s (MPC) second meeting for the year scheduled on March 8 and 9.
In a research note today, Kenanga Research said the central bank is expected to maintain the status quo.
"If the US Federal Reserve (Fed) chairman Jerome Powell delivers a hawkish message and US job data continue to be resilient, it may lead to another round of repricing in its policy path, further pressuring risk assets,” it said.
AmBank Group, in its economic research report, said the OPR hike would only take place in the second quarter or beyond, depending on further guidance as well as how domestic inflation data evolve in the upcoming months.
"In relation to this, the release of the 2022 BNM Annual Report later this month could provide more dynamic in economic and inflation assessments. Against this backdrop, we maintain our call for another 25 basis points increase, bringing the OPR back to the pre-pandemic level of 3.00 per cent.
"In comparison, we noticed that the consensus’s OPR forecast ranges from 2.75 per cent to 3.25 per cent,” it said.
Rakuten Trade Sdn Bhd vice-president of equity research Thong Pak Leng opined that BNM might refrain from hiking the OPR before the US Federal Open Market Committee (FOMC) meeting on March 21 and March.
He said China’s annual legislative meetings outcomes would also be closely watched for indications of where government policy might be headed and the outlook for the economy.
China’s National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) began today.
"Having said that, the valuation of FBM KLCI remains attractive at the current level. Hence we anticipate the benchmark index to remain in its sideway pattern with an upside bias within the range of 1,450-1,470 for next week,” Leng told Bernama.
During the week, China’s robust Purchasing Managers’ Index (PMI) of 52.6 helped partially bolster the ringgit and the Bursa Malaysia.
Its manufacturing PMI index rose to 52.6 in February, the highest reading since April 2012, while the Caixin/S&P Global services PMI continued to grow to 55 in February from 52.9 in January.
At home, the manufacturing sector continued to contract in February at a slightly slower rate, with a PMI score of 48.4 from 46.5 in January.
The latest S&P Global manufacturing reading was the highest in four months.
S&P Global revealed the improvement in output and new orders in February prompted a near-stabilisation of purchasing activity and the maintenance of workforce numbers.
"With inflationary pressures also muted, we will hopefully see further improvements in demand and production in the months ahead,” S&P Global Market Intelligence economics director Andrew Harker said in a statement.
Overall, domestic sentiment continued to be impacted by US interest rate volatility following a slew of prints pointing to ongoing inflation woes in the world’s largest economy.
Slowing demand for US workers further added worries over the US Fed’s next move.
On a Friday-to-Friday basis, the FBM KLCI declined 3.25 points to end at 1,453.55 from last week’s 1,456.80.
On the index board, the FBM Emas Index fell 38.01 points to 10,588.43, the FBMT 100 Index slid 28.06 points to 10,269.76, and the FBM Emas Shariah Index went down 116.55 points to 10,814.04.
The FBM 70 Index dipped 58.60 points to 13,446.61, and the FBM ACE Index was 133.32 points lower at 5,426.73.
Sector-wise, the Financial Services Index gained 141.90 points to 16,163.73, the Plantation Index rose 38.67 points to 6,831, the Energy Index slid 19.11 points to 871.73, while the Industrial Products and Services Index gave up 2.01 points to 177.65.
Weekly turnover declined to 16.13 billion units worth RM11.85 billion against 16.79 billion units worth RM10.89 billion on Friday last week.
The Main Market volume grew to 11.19 billion shares valued at RM10.33 billion from 10.35 billion shares valued at RM9.02 billion a week ago.
Warrants turnover fell slightly to 1.64 billion units worth RM295.43 million from 1.90 billion units worth RM297.03 million previously.
The ACE Market volume decreased to 3.24 billion shares worth RM1.21 billion from 4.16 billion shares worth RM1.56 billion. - Bernama