Defensive mode likely on Bursa Malaysia next week

KUALA LUMPUR: Defensive mode will likely dominate trading pattern on Bursa Malaysia next week, with the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) moving in a tight range of between 1,550 and 1,600.

Market experts believed the local bourse would be influenced by weak corporate earnings reports, local economic data, concerns over the United States-China relations, and how the less dovish US Federal Reserve would affect ringgit sentiment.

AxiCorp chief global market strategist Stephen Innes said the weaker local currency is always bad for sentiment in equities.

“We could see the markets likely to trade more defensively but well within current ranges due to a possibly stronger US dollar across the board… I’m not expecting a bullish pivot higher.

“With Covid-19 flash point still happening around the globe, I believe Top Glove and other healthcare counters will continue to do well but the lack of globalised export would weigh on the index more broadly,” he told Bernama.

Innes said the local market has been benefiting from the fact that Malaysia has dealt well with Covid-19, despite the lengthy movement restriction hindering the recovery.

Meanwhile, Bank Islam Malaysia Bhd economist Adam Mohamed Rahim reckoned lack of fresh leads from the external and local fronts would keep the local bourse in check next week.

He said the only major economic data release next week will be July’s trade data, which is likely show a continuation of growth in exports.

For the week just ended, the key index FTSE Bursa Malaysia KLCI (FBM KLCI) was traded for four days as Bursa Malaysia and its subsidiaries were closed on Thursday for the Maal Hijrah celebration.

Risk-on appetite in the market was mainly fuelled by the liquidity measures announced by China, which the central bank added $101.0 billion of one-year funding via the medium-term lending facility to support banks amid intensifying liquidity stress and keep a fragile economic recovery on track.

On Tuesday, most investors moved to the sidelines as the US announced further restrictions on Huawei Technologies Co. to cut the Chinese company’s access to commercially available chips.

Adding to the weak sentiment was US President Donald Trump’s move to call off last weekend’s trade discussions with China, raising question regarding the agreement that the two countries reached this year.

Locally, movement in the glove-maker shares continued charting pattern on Bursa Malaysia.

On a Friday-to-Friday basis, FBM KLCI ended 12.53 points higher to 1,577.12 on Friday, compared with 1,564.59 the previous Friday.

On the scoreboard, the FBM Emas Index surged 205.55 points to 11,350.08, the FBMT 100 Index chalked up 182.98 points to 11,159.24 and the FBM Emas Shariah Index jumped 514.63 points to 13,429.81.

The FBM 70 ballooned 610.43 points to 14,736.28 and the FBM ACE Index skyrocketed 1,312.29 points to 10,921.88.

Sector-wise, the Financial Services Index tumbled 278.56 points to 13,026.49, the Plantation Index improved 38.88 points to 7,039.66 and the Technology index edged up 4.51 points to 56.26.

The Healthcare index expanded 334.27 points to 4,096.76 and the Industrial Products and Services Index gained 3.13 points to 142.27.

Weekly turnover reduced sharply to 35.68 billion units worth RM23.9 billion compared with 88.84 billion units worth RM33.46 billion the previous week.

Main Market volume shrank to 18.33 billion shares valued at RM17.35 billion versus 50.66 billion shares valued at RM24.48 billion a week earlier.

Warrants turnover decreased to 2.35 billion units worth RM934.36 million from last week’s 3.08 billion units worth RM1.06 billion.

The ACE Market volume dwindled to 14.99 billion shares valued at RM5.69 billion compared with 41.11 billion shares valued at RM13.72 billion last week. – Bernama