KUALA LUMPUR, Aug 31 — Share prices on Bursa Malaysia are likely to stage more oversold bounce next week, correcting their deeply sold situation and tracking more upswings in Wall Street and Asian regional indices.
After declining to a four-month low, with net loss of 151 points or 8.3 per cent over the last five weeks, the key index is expected to trade with an immediate target level of 1,730.
Affin Investment Bank Vice President/Head of Retail Research, Nazri Khan, said global equities are expected to rebound further driven by positive US economic data, delayed Western military strikes in Syria and a drop in the oil price.
Relief in emerging market currencies and fading demand for safe haven assets such as Treasury bonds and gold are also expected to lend support to global equities.
“We expect recovering risk appetite as investors see reduced crude oil price and longer-than-expected military intervention in Syria while positive signs of cooperation among emerging market countries through large currency swap lines will reduce currency pressure,” he told Bernama.
Nazri said encouraging data on the US economy also suggest that the US economy is accelerating on a stable footing which bodes well for global trade.
“At the same time, we note the ringgit has also dropped which will lend support to stabilise Bursa next week,” he added.
However, Nazri said despite the mild recovery, there are three global risk looms ahead — the US Federal Reserve’s stimulus tapering on September 16, the looming fiscal cliff debate in the US, and the upcoming Germany general elections — which may reintroduce volatility to the global market.
Meanwhile, domestically, some headlines that will catalyse the local market include Maybank Bhd signing a three-year collaboration in the Vietnam securities industry, Yinson Holdings Bhd venturing into Africa for bigger oil and gas related services, and Naim Holdings Bhd growing its properties to more than RM1 billion in five years.
“Strategy-wise, we would advocate a more defensive approach heading into September-October. Conservative investors should stick with bluechips that possess resilient business models during volatile sell-off.
“These include the likes of telcos and consumer stocks such as Maxis, Axiata, Aeon, QL Resource and Dutch Lady,” Nazri said.
Aggressive investors may want to accumulate reversal asset class, which typically goes up during a volatile season, including flight-to-safety safe-haven assets such as yen, dollar, Swiss franc and gold futures, he added.
On a Friday-to-Friday basis, the FBM KLCI rose 9.7 points to 1,727.58 from 1,721.07 last Friday.
The Finance Index declined 36.6 points to 16,206.17, the Plantation Index was up 101.3 points to 8,203.07 and the Industrial Index added 0.1 point to 2,909.82.
The FBM Emas Index appreciated 9.7 points to 11,968.58, the FBMT100 rose 28 points to 11,729.23, the FBM 70 Index shed 34.4 points to 13,539.53 and the FBM ACE Index dropped 320.6 points to 4,929.81.
Weekly turnover declined to 9.490 billion shares valued at RM12.550 billion from 11.571 billion shares valued at RM14.206 billion last week.
Main market volume decreased to 7.385 billion units worth RM12.177 billion from 8.893 billion units worth RM13.731 billion previously.
Warrants edged down to 260.341 million shares valued at RM24.637 million from 419.613 million shares valued at RM41.203 million last week.
The ACE market volume fell to 1.750 billion units worth 336.379 million from 2.248 billion units worth RM426.08 million last Friday. — Bernama
