REVIEW: The local stock market came under selling pressure over the week amid a lack of catalysts and persistent worries over the state of the US and the troubled 17-nation eurozone economies.
The benchmark FBM Kuala Lumpur Composite Index (FBM KLCI) extended its losses as the week began, losing 5.97 points to settle at 1,623.31 on Monday. Shares on Bursa Malaysia bucked regional trend that saw Asian shares staging a rebound on hopes that the US policymakers would reach a deal to avert a fiscal cliff.
Performance of blue-chip stocks was notably poor due to weak buying momentum on Monday. Overall, volume traded was moderate at 848.8 million shares worth RM1.11bil, with losers trumping gainers at 378 to 280.
Asian markets, on the other hand, most gained on Monday, with the Hong Kong's Hang Seng Index (HIS), for instance, rising 103.05 points to 21,262.06, while Singapore's Straits Times Index (STI) adding 5.30 points to 2,950.93.
Shares on Bursa Malaysia staged a marginal rebound on Tuesday, buoyed by the overnight US rally on optimism over a fiscal cliff fix in the world's largest economy. Still, sentiment was somewhat tempered by Moody's Investor Service's downgrade of France's sovereign debt rating by one notch to AA1 with a negative outlook.
The FBM KLCI only gained 0.89 of a point to 1,624.2 on Tuesday, off an early high of 1,628.3, as losers trumped gainers 358 to 298 on improved trade of 1.02 billion shares worth RM1.69bil.
Elsewhere in Asia, markets were mixed. HSI lost 33.78 to 21,228.28 points, while STI gained 7.89 to 2,958.82. Japan's Nikkei lost 10.56 to 9,142.64 and Shanghai's A shares lost 8.06 to 2,008.92 points.
Shares on Bursa Malaysia slid on Wednesday, despite regional rebound on positive economic data from the United States that show new-home construction rising to a four-year high. There was also speculation that China would cut banks' reserve ratios to support growth.
The FBM KLCI was down by 1.23 points to 1,622.97 on flat turnover of 1.02 billion shares worth RM1.58bil. In terms of market breadth, the loser-to-gainer ratio was 349 to 275.
Asian markets were mostly in the positive territory on Wednesday, with the HIS rising 296.08 points to 21,524.36, STI up 1.48 points to 2,960.30, while Nikkei was up by 79.88 points to 9,222.52 and Shanghai's shares up by 21.4 points to 2,030.32.
Shares on Bursa Malaysia extended their losses on Thursday, with the FBM KLCI shedding 4.42 points to close at 1,618.55, due to persistent selling on blue chips. Volume was slower, with only 892.3 million shares worth RM1.57bil changing hands. Losers continued to lead gainers at 384 to 219.
Asian markets were mostly firmer, on the other hand, as data showed that China's manufacturing activities expanded and the US job market was stabilising, while the lower yen was seen as being supportive of Japan's trading activities.
HSI gained 218.84 points to 21,743.2, while STI was up by 26.33 points to 2,986.63 and Nikkei was up 144.28 points to 9,366.8. Shanghai's shares, meanwhile, fell 14.71 points to 2,015.61.
The Malaysian market extended its losses on Friday, with the FBM KLCI losing 4.23 points to end the week at 1,614.32, due to a lack of buying interest amid global economic uncertainties. Turnover improved, with only one billion shares worth RM1.49bil changing hands.
Market breadth was negative with 435 losers against 216 gainers.
Regional markets remained relatively firm, with most ending the week in the positive territory. HSI gained 170.78 points to 21,913.98 and Shanghai shares added 11.77 points to 2,027.38, while STI was marginally lower by 0.74 of a point at 2,985.89.
Outlook: Although sentiment has turned positive regionally, the local market is expected to remain weak in the week ahead on poor buying momentum.
According to BIMB Securities Research's analyst Ng Keat Yung, the technical outlook for the FBM KLCI remains unfavourable.
“The bear momentum remains stronger than the bull,” he says, pointing to the present value of the index's moving average convergence/divergence as a signal of uncertainty in the near term.
Ng thinks the critical support level for the FBM KLCI will be at 1,605.
It is to be noted that since hitting all time high of 1,675.69 on Nov 1, the FBM KLCI has been on a downward trend.
Maybank Investment Bank Bhd head of retail research Lee Cheng Hooi had in his recent report warned of the dreaded short term moving average “dead cross” signal, which his team sighted on Wednesday.
A “dead cross” emerges when index falls below its longer term moving average and triggers a secular (long-lasting) downward trend.
Lee, therefore, advocates “sell” on all rebound rallies, as he believes the index will head towards the 1,597 and 1,574 downside target areas.