Limit-down stocks influence FBM KLCI

RHB Research said the next resistance for the FBM KLCI is at 1,500 points.

PETALING JAYA: Choppy trading appears to dominate the local bourse of late even as the FBM KLCI continues to test the key 1,500-point resistance level.

In the bigger picture, sentiment appears equally balanced with upside support coming from the strong performance in the stock markets led by the United States but also tempered by the continued slowing of China’s economy, which had pulled the stock markets there to multiyear lows.

Locally, sentiment for the rest of the week will also be influenced by Bank Negara’s interest rate decision tomorrow while the US fourth-quarter gross domestic product (GDP) and 2023 advance estimate data later this week will help become the headwinds or tailwinds for the markets.

Asian markets were supported yesterday by a more positive momentum following a Bloomberg report that the Chinese authorities were considering a stimulus package worth two trillion yuan to stabilise the country’s stock markets.

The FBM KLCI rose for a third consecutive day yesterday by 4.92 points, or 0.33%, to 1,496 with 5.16 billion securities worth RM3.33bil changing hands.

Rakuten Trade head of equity sales Vincent Lau said the FBM KLCI’s movement yesterday was influenced to a degree by a number of limit-down stocks, which had seen some reprieve.

Battered down Rapid Synergy Bhd saw some buying interest with its price rising to an intra-day high of RM2.41 from RM1.95, before fresh selling in the afternoon saw it settling back at RM1.95.

At the same time, YNH Property Bhd, which closed at 56 sen on Monday, surged to a high of 82 sen in intraday trade before coming back down to 61 sen, up 10% for the day.

Lau said this was most likely due to bargain hunting and subsequent profit-taking activities among day traders but believes the bourse could be seeing the tail-end of such activity.

“We think regular trading will resume at the end of this week, and on a broader picture, Malaysian equities are offering investors plenty to look forward to a better 2024,” he told StarBiz.In its report yesterday, RHB Research said the next resistance for the FBM KLCI is at 1,500 points, followed by the 1,530-point level while, support is seen at 1,470 points followed by 1,450 points.

It advised investors to maintain their long positions for the time being as there were technical signs of strong underlying momentum.

“It aligns with expectations for a return to the 1,500-point threshold. Additionally, with the relative strength index improving at 60% positive territory, there are indications the bullish momentum is likely to endure,” RHB Research noted.

“The uptrend resumption would be confirmed if the index surpasses the 1,500-point threshold. Premised on the bullish setup, our positive trading bias is maintained,” it added.

Meanwhile, Hong Leong Investment Bank Research (HLIB Research) was more cautious on the outlook for the FBM KLCI due to the lingering geopolitical tensions in the Middle East, disappointments in stimulus measures from China and speculations of the Fed’s pivot timeline.

“The FBM KLCI may continue to remain wary as the recent domino effect in the meltdown of perceived warehoused stocks may continue for a while but on a smaller scale.

“Nevertheless, downside is likely to be well-cushioned and any sell down will create bargain-hunting opportunities on any favourable domestic leads such as the rising foreign direct investment and rising risk appetite on an undemanding FBM KLCI’s 2024 price-earnings ratio at 13.4 times compared to the 10-year mean of 17.2 times,” it said.

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