Bursa Malaysia to see volatile trade with downside bias next week

An analyst said the FTSE Bursa Malaysia KLCI (FBM KLCI) had reached the lowest level since December 2011, with a bearish harami pattern prevailing which marked a further downward momentum.

KUALA LUMPUR: Bursa Malaysia is expected to continue its volatile trading mode with a downside bias next week, as political uncertainty persists in the local landscape.

An analyst said the FTSE Bursa Malaysia KLCI (FBM KLCI) had reached the lowest level since December 2011, with a bearish harami pattern prevailing which marked a further downward momentum.

"This was due to the high level of foreign outflow as well as the exit of retail investors from the market. Without any strong local policy or the return of political stability, it would be hard for the market to rebound in the near term, ” she said.

The FBM KLCI ended this week at 1,482.64, down 48.56 points from the previous Friday’s close, as the nation was shocked with the political shift over the week, which witnessed the collapse of the Pakatan Harapan government after being in power for 22 months.

Duringn the week, the cabinet was dissolved and an interim Prime Minister was appointed, pending the formation of a new cabinet.

As for the coming week, she said the main index would trade between 1,460 to 1,500 with an immediate resistance at 1,510 and an underlying support at 1,450.

"Besides political instability, the market would also be influenced by the corporate results season as well as the upcoming FTSE World Government Bond Index (WGBI) review in March.

"An exclusion from the WGBI list would cost the local bourse its international market accessibility, ” she said.

As of January this year, foreign holdings in Malaysia’s bond market were about US$100 billion before the COVID-19 concerns as well as political turmoil kicked in.

On a weekly basis, the market has recorded the largest outflow for the year worth more than RM1 billion compared with last week’s RM447.9 million.

Heavyweight stocks such as Maybank and Petronas-linked counters have reported a decline in corporate earnings for financial year 2019, as the companies prepare to face higher volatility in 2020 due to the COVID-19 outbreak as well as global economic slowdown due to trade tensions.

On the broader market, there has also been an exodus of funds in various sectors, especially energy, construction and technology. This was due to the uncertainty of government spending on newly announced as well as ongoing and revived projects.

On the scoreboard, the FBM Emas Index gave up 486.84 points to 10,478.77 and the FBMT 100 Index decreased 446.31 points to 10,300.80.

The FBM ACE Index fell 526.63 points to 5,238.29, the FBM Emas Shariah Index declined 536.11 points to 11,121.15 and the FBM 70 plunged 1,007.87 points to 12,873.92.

Sector-wise, the Financial Services Index dipped 365.27 points to 14,330.65, Plantation Index erased 324.91 points to 6,809.74 and the Industrial Products and Services Index slipped 12.99 points to 132.80.

Weekly turnover rose to 19.61 billion units worth RM17.14 billion compared with last week’s 13.93 billion units worth RM10.31 billion.

Main Market volume shot up to 12.85 billion units worth RM15.50 billion compared with 8.21 billion shares valued at RM9 billion previously.

Warrants turnover increased to 2.39 billion units worth RM420.73 million from 1.79 billion units worth RM304.55 million last week.

The ACE Market volume spiked to 4.46 billion shares worth RM1.21 billion from 3.91 billion shares valued at RM999.82 million last week. - Bernama