Bursa Malaysia is likely to trend higher next week on improved sentiment including Bank Negara’s overnight policy rate (OPR) cut, rebound in oil prices, global bank stimulus and a stronger currency.
Affin Hwang Investment Bank Vice-President and Retail Research Head, Datuk Dr Nazri Khan Adam Khan said the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) was ready to stage further upside if the ringgit and commodities continued to strengthen.
He said the local bourse should be catalysed by Bank Negara’s unexpected move to reduce the OPR to 3.00% from 3.25%.
“The index should be bullish with the rate cut although the broad market is slow to react.
“We see the OPR cut as a pre-emptive move to ensure that inflation remains under control and the economy remains on a steady growth path,” he told Bernama.
This was confirmed by the Malaysian bonds three-year yield which dropped to its lowest level since 2009 and a stronger ringgit which hit a 10-week high against the US dollar this week, he added.
He said technically, the FBM KLCI had broken out from its consolidation zone and was still looking to test its immediate resistance level at 1,680.
“Overall, given the buoyant mood coming from global markets as well as positive catalysts in the domestic front, we reckon that the FBM KLCI could be poised to trend upwards this week to break out from its consolidation zone,” said Nazri Khan.
He said the upside resistance and downside support are now spotted at 1,700/1,680 and 1,650/1,630 levels, respectively.
On Friday-to-Friday basis, the FBM KLCI rose 23.86 points to 1,668.40 from 1,644.54 recorded last week.
The FBM Emas Index improved 190.22 points to 11,657.87, the FBMT 100 Index rose 184.2 points to 11,360.08 and the FBM Emas Syariah Index was 208.9 points higher at 12,228.11.
On a sectoral basis, the Finance Index fell 22.19 points to 14,252.12, the Industrial Index increased 46.35 points to 3,140.55 and the Plantation Index improved 13.94 points to 7,531.31.
Weekly turnover increased to 8.18 billion units worth RM9.37 billion from 2.87 billion units worth RM3.37 billion last week.
Main market volume rose to 5.44 billion shares worth RM8.84 billion from 1.95 billion shares valued at RM3.21 billion previously.
Warrant turnover swelled to 1.22 billion units valued at RM197.75 million from 446.69 million units worth RM75.04 million last week.
The ACE market increased to 1.49 billion shares worth RM320.29 million from 471.92 million shares valued at RM89.36 million previously.