PETALING JAYA: Continued interest from foreign investors kept the local market buoyant, pushing the FBM KLCI past 1,600 points as optimism remains amid the easing of movement restrictions and the ongoing strength of commodity prices.
The FBM KLCI opened at 1,602.89 points yesterday, up from the previous trading close of 1,598.28 on Friday.
The index hit a high of 1,609.62 points in intra-day trading and settled 7.69 points higher, or 0.48%, at 1,605.97.
Foreign funds remained net buyers in local stocks last week, with net inflow amounting to RM925mil, according to MIDF Research.
This was the second week of net buying by foreign investors, after one week of inflow previously.
Analysts are mostly positive on the market following the relaxation of interstate travel and the reopening of international borders.
TA Research noted that the reopening play should continue to gain strength as more evidence of a recovery from the ground filters through into the stock market and fuels investor optimism going forward.
It expected key banking and construction heavyweights such as AMMB Holdings Bhd, CIMB Group Holdings Bhd, Malayan Banking Bhd, Public Bank Bhd, RHB Bank Bhd and Gamuda Bhd to strengthen their uptrends after a year-long consolidation due to economic revival optimism.
Investors may also be looking at potential stock ideas as rotational plays ahead of the Budget 2022 presentation on Oct 29.
“Investors’ anticipation of a rally in the FBM KLCI during the pre-budget period has become a self-fulfilling prophecy that has propelled the benchmark index higher almost 71% of the time since the Asian financial crisis.
“It has started much earlier this year because of the positive news flows from abroad and the economic recovery optimism following the relaxation on interstate travel and reopening of international borders,” the brokerage said.
Moving forward, it cautioned that political instability and policy uncertainties may be the biggest hurdles that need to be crossed to attract huge foreign inflows.
But for now, it said any foreign-selling should be cushioned by buying support from local institutional funds and retailers as they anticipate a stronger recovery next year when the economy awakens from its worst slump post-Covid-19 and foreigners return to the undervalued Asian markets.
Meanwhile, Rakuten Trade noted that buying can be seen in the oil and gas sector as the Brent crude breached US$85 (RM354) per barrel.
It has been reported that a shortage of natural gas and coal from Asia to Europe was driving additional demand for oil products in power generation. This also coincides with key economies rebounding from the pandemic, leading to a significant tightening of the market.
Oil has rallied to the highest level since October 2014 and commodities prices, including crude palm oil, are showing no signs of slowing, which could benefit Malaysia, as an exporter.