KUALA LUMPUR (March 17): The FBM KLCI rose 8.06 points or 0.5% as Bursa Malaysia's volume neared five billion shares on expectation of a more moderate pace in US interest rate hikes this year.
Such US rate sentiment augurs well for Asian markets in anticipation of foreign demand for higher-yielding Asian assets. At Bursa Malaysia today, the KLCI closed at 1,745.2 points, after rising 19.78 points yesterday.
Across Bursa Malaysia today, 4.98 billion shares worth RM5.04 billion changed hands. In August 2014, the bourse's volume reached a record high at 7.67 billion shares.
Today, Malaysian shares rose to current levels after the US increased its benchmark interest rate by 25 basis points last Wednesday (March 15) to between 0.75% and 1%.
Reuters reported today that while the Federal Reserve raised interest rates by 25 basis points on Wednesday as widely expected, it kept its original forecast of three rate hikes this year, disappointing investors who were expecting a bump up to four after a string of upbeat US economic data.
In Malaysia, Hong Leong Investment Bank Bhd analyst Loui Low Ley Yee told theedgemarkets.com that the market was "overheated".
MIDF Amanah Investment Bank Bhd deputy research head Mohd Redza Abdul Rahman said in a text message to theedgemarkets.com that the KLCI's rise was due to the "continuous improvement in the health of banks and expectation of better earnings performance this year which has seen the run-up in banking stocks".
KLCI-linked Public Bank Bhd shares rose 30 sen to close at RM20.18 to become Bursa Malaysia's second-largest gainer. Across Bursa Malaysia, gainers outpaced decliners at 591 versus 368 respectively.