KUALA LUMPUR, Oct 8 ― Ever since the Covid-19 pandemic jolted the equity market, Bursa Malaysia’s main index, the FTSE Bursa Malaysia KLCI has been under pressure to break from its oversold position.
An analyst said that the index is currently facing difficulty in breaching the immediate resistance level of 1,520.
“From the technical benchmark, the indicators have turned negative as the moving average convergence/ divergence (MACD) histogram has turned red, while the relative strength index (RSI) remained below 50, which indicates a downtrend momentum for now,” she said.
She added that the spike in the country’s Covid-19 cases over the past week was a cause for concern for investors, especially foreign institutional investors.
“For this round (the fourth quarter), local retail buyers will be largely absent as the six-month blanket moratorium ended last month.
“This means that there will be less disposable income for individuals as many are facing job disruptions as well as pay cuts,” she said.
Many counters have been under pressure since the pandemic began, including Tenaga Nasional, Maybank, Axiata Group and Genting, due to their size in terms of market share as well as foreign portfolios.
She said investors’ confidence may be boosted by the Budget 2021 announcement on Nov 6, which could subsequently push the local bourse higher to break the resistance level.
“Giving the correct emphasis to rebuild the local economy post-Covid-19 could push the local market higher for the last mile of this year,” she said.
Global research houses noted that 2020 has been a gloomy year for the world economy due to the ongoing pandemic, and it would take at least two years for economies to fully recover.
A research by the World Economic Forum (WEF) projected global growth to be at a contraction of 4.9 per cent in 2020 ― 1.9 per cent below the World Economic Outlook forecast in April 2020.
WEF added that the Covid-19 pandemic had a more negative impact on activities in the first half of 2020 than it had originally anticipated, and the recovery is projected to be more gradual than what was previously forecast.
“However, in 2021, global growth is projected at 5.4 per cent.
“Overall, this would leave 2021 GDP some 6.5 percentage points lower than the pre-Covid-19 projections of January 2020,” it said. ― Bernama
