KUALA LUMPUR, Aug 10 — The FBM KLCI is likely to stay above the 1,600-level next week as the market is seen stabilising from the recent weakness, said analysts.
Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew said there would be some space for bargain hunting activities for stocks such as technology to shore up the key index next week.
“The support levels are at 1,613, 1,609 and 1,602. All of these suggest that the market is trying to find a bottom and should stay at about 1,600 in the week ahead.
“The trade war is the big thing that is affecting the technology sector and any hopes of either a temporary truce or an eventual resolution would benefit the technology sector. That is the biggest opportunity for bargain hunting for technology stocks,” he told Bernama.
Pong added that there was an upside to the construction sector as the biggest beneficiary year-to-date due to the resumption of the Mass Rapid Transit, Light Rail Transit 3 and East Coast Rail Link (ECRL) projects.
“These are not likely to be fully reflected in terms of earnings yet but at the moment, investors are taking a breather in construction stocks after the resumption of works was announced, but the actual work such as the ECRL project only resumed at the end of July and won’t be reflected in earnings just yet,” he added.
During the week just-ended, the market enjoyed some relief with the FBM KLCI recovering to the 1,600 level after suffering heavy losses from tracking the performance on Wall Street during mid-week. The recovery was also in line with the best performance of Wall Street in two months and the signs of goodwill from China in fixing its currency and encouraging export output.
Meanwhile, Phillip Capital Management senior vice-president (investment) Datuk Dr Nazri Khan Adam Khan expected more upside in the near term towards the 1,650 resistance level, and noted that this would serve as an opportunity to accumulate fundamentally strong stocks for another round of upside wave.
“We expect the local market sentiment to improve in anticipation of higher foreign inflow after Malaysia said it will set a channel for China to facilitate fund flow into the country. The move would see foreign direct investments in manufacturing from China double to about RM8.8 billion from RM4.4 billion in the first quarter of this year,” he said.
In July, Malaysia’s international reserves edged up by 1.2 per cent to US$1.2 billion and remained in an uptrend for two consecutive months.
Nazri Khan sees steady demand for the telecommunication and transportation sectors with Telekom Malaysia Bhd and Kerjaya Prospek Group Bhd as top picks in their respective sectors.
“Risk-averse investors are advised to avoid stocks that have high exposure to the global market,” he added.
Bursa Malaysia and its subsidiaries will be closed on Monday, August 12, in lieu of Hari Raya Aidiladha which falls on Sunday, August 11, and will resume operations on Tuesday.
On a Friday to Friday basis, the FBM KLCI fell 11.71 points to 1,615.05 from 1,626.76 last week.
Trading in the week was heavily influenced by the Wall Street performance and on negotiation between the US and China on their trade dispute.
The FBM Emas Index declined 76.46 points to 11,440.33, the FBMT 100 Index slipped 72.13 points to 11,272.87 and the FBM Emas Shariah Index inched up 0.05 of-a-point to 11,926.57.
The FBM 70 weakened 51.85 points to 14,304.37 and the FBM Ace Index added 8.3 points to 4,697.64.
Sector-wise, the Financial Services Index slid 122.88 points to 15,841.99, the Plantation Index advanced 38.24 points to 6,727.41 and the Industrial Products and Services Index eased 1.58 points to 152.64.
Weekly turnover rose to 12.45 billion units valued at RM10.11 billion against 10.06 billion units valued at RM8.25 billion last week.
Main Market volume increased to 7.64 billion shares worth RM9.19 billion from 6.40 billion shares worth RM7.55 billion.
Warrants turnover went up to 2.41 billion units valued at RM596.71 million against 1.92 billion units valued at RM416.16 million.
The ACE Market volume was higher at 2.40 billion shares valued at RM318.84 million versus 1.72 billion shares valued at RM264.95 billion last week. — Bernama
