PETALING JAYA: After a positive start to December that saw the FBM KLCI re-emerging above the 1,600-point mark, weak regional sentiment and fears over a Trump presidency may keep the barometer index flat for the rest of the month.
The fact that retail and foreign investors continued to be net sellers of Malaysian equities has also softened the market momentum.
For now, investors are staying on the sidelines as they await more clarity.
Mohd Redza Abdul Rahman, former head of research at a local investment bank, told StarBiz that the FBM KLCI is likely to trade range-bound between 1,600 and 1,620 points this month.
The 30-stock index declined marginally by 0.11% yesterday, despite closing at its intraday high of 1,611.43 points.
All sector indices on Bursa Malaysia, except for plantation, ended in the red.
The Utilities Index saw the biggest contraction of 1.19% yesterday, while the Plantation Index was up by just 0.15%.
The bourse’s overall market breadth was negative, with 433 gainers trailing 662 losers and 478 counters remained unchanged.
Trading volume amounted to 3.02 billion shares, valued at RM2.4bil.
Bursa Malaysia was affected by mixed regional sentiment following the South Korean political crisis and China’s soft consumer inflation print.
The world’s second-largest economy reported that inflation in November dipped to a five-month low of 0.2%, missing expectations, which led to a 0.17% decline in China’s composite index.
Regionally, South Korea’s Kospi tumbled 2.78% and Singapore’s Straits Times Index was marginally lower by 0.03% However, Japan’s Nikkei 225 rose 0.18% and Hong Kong’s Hang Seng Index gained 2.76%.
Looking ahead, Mohd Redza said Donald Trump’s presidency will likely result in a flattish FBM KLCI, despite the certainty of a rate cut by the US Federal Reserve.
Explaining investors’ fears of Trump, Mohd Redza recalled that Trump signed plenty of executive orders in his first few months in the White House back in 2017.
“He might just do that, too, this time around. The fear of that happening is ‘real’ with him making threats to BRICS members over their respective currencies for trading among themselves, and his pledge to slap a 25% tariff on all goods coming from Mexico and Canada, and an additional 10% on Chinese products.”
Amid global uncertainties and mixed sentiment, Mohd Redza said the “only catalyst” for the FBM KLCI is the upcoming index rebalancing on Dec 23.
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