PETALING JAYA: Bursa Malaysia gave up earlier gains boosted by the Federal Reserve’s announcement that it would modestly reduce the pace of its bond purchases.
At the close, the 30-stock gauge, the benchmark FTSE Bursa Malaysia KL Composite Index (FBM KLCI), which hit a fresh record high on Tuesday, ended 0.07% lower at 1,846.18 points.
Still, the longer-term outlook for the local market remains positive backed largely by stronger economic growth worldwide.
“The quantum of the quantitative easing (QE) tapering has been more measured than initially anticipated.
“Back in September when the market had expected QE tapering to start, the consensus expectation was that of a US$20bil (RM64bil) cut,” Alliance Research told clients in a report.
With the Fed starting its QE tapering at a more measured pace of US$10bil cut while maintaining its near zero interest rate well into 2015, the research house is expecting equity markets to be “boosted by renewed confidence” going into 2014.
On Wednesday, the Fed’s open markets committee said on the back of a string of strong jobs growth numbers, “cumulative progress” had been made in the world’s largest economy and hence it was cutting back its US$85bil a month bond-buying programme to US$75bil.
“Fund flow wise, given a more measured pace of tapering, we expect asset managers to have more confidence to “put money to work” in 2014,” said Alliance, which is maintaining its end-2014 FBM KLCI target of 1,970.
In its market strategy report, MIDF Research said it expected improvement in earnings sentiment consistent with the expected rebound in the nation’s gross national product.
“Thus, going forward, we foresee generally upward-biased revisions in the 2014 earnings estimates of the FBM KLCI.”
Regionally, most markets finished mixed at yesterday’s close.
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