PETALING JAYA: The stock market kick-started the week on a positive note, with the benchmark FBM KLCI index ending the day above the 1,700 level for the first time in nine months, helped by gains in banks and other blue chips.
It tracked the uptrend of its Asian counterparts which were also broadly higher following US president Donald Trump’s positive comments on ties between the United States and its key Asian trading partners.
At the close, the FBM KLCI finished 1,710.24, up 11.3 points or 0.63% from last Friday’s close of 1,698.94.
This was despite the ringgit and oil prices remaining weak.
The ringgit fell marginally against the US dollar yesterday to 4.4482 from 4.4440 while US light crude oil and Brent fell 44 US cents to US$53.42 and US$56.26 respectively.
Traders felt that the ringgit was undervalued based on the fact that the US dollar index, a measure of the strength of the greenback against major currencies, was down by about 3% from its recent peak.
Because of this, they felt that the ringgit should be about RM4.38 against the US dollar.
“Foreign investors were the net buyers, their interest in blue chip stocks started since last week due to a strong US dollar,” said a market observer.
An analyst said Asian markets have been gaining momentum since Trump reaffirmed the United States’ friendly ties with Japan and acknowledged China’s “one China” policy.
“Almost all Asian markets have been on the uptrend since last week, Malaysia was slightly lagging behind,” the analyst said.
Among the key regional markets, Japan’s Nikkei 225 was up 0.41% to 19,459 while the Hang Seng index gained 0.58% to 23,710.98. The Shanghai Composite Index was up 0.63% to 3,216.84, while the Singapore Stock Exchange advanced by 0.36% to 3,111.63.
Kenanga Research expected the overall market sentiment to remain upbeat, although the local bourse started 2017 on a cautious note.
It said the market would be supported by the stabilising in the ringgit and firmer oil prices.
“In addition, the overwhelmingly bullish US market with the Dow Jones at its all-time-high has helped to spur buying sentiment,” it said in a report yesterday.
It added that the US market was supported by strong earnings report cards coupled with renewed post-election rally from Trump’s business-friendly initiatives.
Factors that will determine the sustainability of the index holding above the 1,700 mark are the international reserves figures and Malaysia’s trade surplus.
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