KUALA LUMPUR, Oct 5 — Bursa Malaysia is expected to further weaken next week, with the benchmark FTSE Bursa Malaysia (FBM KLCI) likely to languish towards the 1,540 level, depressed by worries over a global slowdown, falling ringgit against the US dollar and recession.
Philip Capital Management senior vice-president (investment) Datuk Dr Nazri Khan Adam Khan said the recent discouraging US manufacturing data suggested that the global economy is decelerating due to the prolonged trade tensions.
However, the local benchmark bears should pause for a breather ahead of the tabling of the 2020 Budget next week.
“The tabling of the fiscal budget formulated under the Pakatan Harapan-led government would be a positive catalyst for the local market, a turning point for the government to restore public confidence to the financial market.
“Along with the elevated uncertainty and potentially deeper global economic slowdown, an expansionary budget is expected without compromising on the fiscal consolidation,” he told Bernama.
He expects the budget to focus on digital economy, low wage and B40 (bottom 40 per cent of household income group) consumer power, which could restore sentiment for the domestic market as it transitions towards the post-Vision 2020 era.
Besides, he said the government has shown its readiness to study the reintroduction of the Goods and Services Tax (GST) following a proposal from the Malaysian Institute of Economic Research (MIER).
MIER recently urged the government to consider reintroducing the GST at a lower rate of three per cent to boost government coffers.
On the technical front, Nazri Khan said although there is no immediate positive signal, he hopes to see strong positive development above the multi-year low of 1,503 points, which is its new support, driven from the low level of 1,532 points on Aug 25.
“On the flip side, we revise the immediate resistance within the 1,572-1,600 points area and support within the 1,540-1,530 points levels.
“As the global uncertainty risk continues, it’s best for investors to play safe on the local defensive and dividend stocks,” he added.
Meanwhile, Asia Pacific market strategist at AxiTrader Stephen Innes said foreign investors could be holding back a bit to see what surprises may be in store from the Budget 2020 announcement.
“But there remains a high level of US-China trade optimism in the air and with the US Federal Reserve expected to turn dovish, this could be enough to carry short-term sentiment forward.
“However, I think there is enough pessimism on the global growth front that will continue to weigh on investor sentiment and this coupled with the budget, will keep investors on the defensive,” he said.
Yesterday, Bursa Malaysia closed 0.41 per cent lower as an extension of selling activity amid fears of slower economic growth and investors squaring off their position for the week.
On a week-on-week basis, the FBM KLCI weakened 26.47 points to 1,557.67 from last week's close of 1,584.14.
The FBM Emas Index declined 157.37 points to 11,048.52, the FBMT 100 Index fell 164.28 points to 11,0874.33 and the FBM Emas Shariah Index contracted 114.55 points to 11,646.62.
The FBM 70 lost 124.23 points to 13,806.48 and the FBM Ace Index slipped 43.54 points to 4,509.29.
Sector-wise, the Financial Services Index dropped 319.97 points to 14,997.39, the Industrial Products and Services Index slid 1.87 points to 151.26, and the Plantation Index contracted 155.59 points to 6,567.98.
Weekly turnover narrowed to 9.73 billion units valued at RM7.26 billion from 9.89 billion units worth RM7.52 billion previously.
Main Market volume was higher at 5.83 billion shares worth RM6.59 billion compared with 5.81 billion shares valued RM6.67 billion.
Warrants turnover was lower at 1.44 billion valued at RM283.57 million compared with 1.72 billion worth RM379.59 million.
The ACE Market volume firmed up to 2.44 billion shares worth RM386.34 million from 2.35 billion shares valued at RM462.30 million. — Bernama
