KUALA LUMPUR, Dec 21 — Bursa Malaysia is anticipated to trade firmer next week, re-testing the 1,600 level convincingly and pushing towards the 1,625 level, backed by positive developments in the trade war between the US and China as well as UK Brexit, analysts said.
There may also be better participation from foreign investors, they said.
Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said the optimistic forecast was based on this week’s stronger FBM KLCI, which went up as high as 1,599.11 points on Dec 18.
“At the moment, the US-China trade discussion appears to be proceeding quite well as the US has partially rolled back the tariffs and China has promised to buy more agricultural products from the US,” he told Bernama.
On hindsight, he said, global risks seemed to have subsided for now which had led the risk-on mode to prevail.
“Perhaps, next week there could be further interest from abroad as the government is committed to implement major infrastructure projects next year.
“This should benefit the construction-related stocks. Besides, the technology sector is expected to do better given the recent forecast by the World Semiconductor Trade Statistics (WSTS) organisation that global semiconductor sales are expected to grow by 5.9 per cent in 2020 after declining by 12.8 per cent in 2019,” said Mohd Afzanizam.
Meanwhile, he said, the recent Petronas Activity Outlook 2020-2022 report showed there would be more projects for the upstream players as the existing contracts were about to expire in the immediate term.
“There are pockets of opportunity amidst the global uncertainty. Therefore, investors would be selective in their investment decisions,” he said.
Echoing Afzanizam’s positive tone, AxiTrader Asia-Pacific market strategist Stephen Innes said the US-China trade deal relief rally was set to take on a fundamental shift as momentum built for the global growth trade rally of 2020 on the back of the decisive run of comprehensive economic data to end the year.
This, he said, was key for the FBM KLCI as the global growth trade plays out favourably for the oil and gas constituents and other resources-linked commodity firms on the bourse, as prices of oil and other commodities had been moving higher on more-optimistic growth outlook.
Innes also said the week witnessed decent equity inflows triggered by a revival of the Bandar Malaysia project and there could be some follow-through on that positive sentiment.
“But one of the reasons I remain upbeat on Malaysia’s capital market is the ringgit which is looking ‘cheap’ relative to other regional currencies, with an undervaluation correlated between -3 and -7 per cent, in my opinion.
“I also think as trading of the ringgit could be muted entering 2020 and there is significant scope for export and equity inflow flow-sensitive currencies like the ringgit to perform well.
“Given the definite trade deal overtones, the valuations on FTSE Bursa Malaysia (FBM) KLCI which have lagged regional peers this year should look attractive to foreign investors, even more so if the ringgit wakes from its half-year slumber,” Innes added.
For the week just ended, the market was mostly higher, supported by the revival of the Bandar Malaysia project and window-dressing activities as the year drew to a close as well as an improved global sentiment as the outlook for the US-China “phase one” trade deal was positive.
Banking stocks were among beneficiaries from the project’s revival, besides construction stocks, namely Ekovest and IWCity.
On Thursday, trading in the equities market was abruptly halted at 4.45 pm due to a technical issue and resumed trading as normal at 9.00 am the next day.
On a Friday-to-Friday basis, the FBM KLCI rose 39.02 points to 1,610.18 from 1,571.16 previously.
On the scoreboard, the FBM Emas Index increased 217.16 points to 11,404.74, the FBMT 100 Index advanced 224.63 points to 11,210.43, and the FBM Emas Shariah Index surged 233.57 points to 12,068.54.
The FBM 70 jumped 88.98 points to 14,107.98 and the FBM Ace Index expanded 35.66 points to 5,028.59.
Sector-wise, the Financial Services Index surged by 308.49 points to 15,561.53 and the Industrial Products and Services Index gained 2.72 points to 154.86, while the Plantation Index was 107.74 points higher at 7,604.15.
Weekly turnover fell to 11.41 billion units worth RM9.87 billion from 13.08 billion units valued at RM9.47 billion in the previous week.
Main Market volume narrowed to 7.88 billion units valued at RM9.06 billion versus 9.43 billion units worth RM8.69 million before.
Warrants turnover went up to 1.54 billion units valued at RM271.82 million against 1.45 billion units worth RM228.34 million previously.
The ACE Market volume, expanded to 1.98 billion units valued at RM535.60 million from 1.85 billion units valued at RM549.65 million. — Bernama
