KUALA LUMPUR (Aug 21): The FBM KLCI is expected to kick start the week on a lacklustre note following the weaker close last Friday at Wall Street, but investors may find some relief after the strong performance of the Malaysian economy in the second quarter of this year with a growth of 5.8% year-on-year.
"Given the strong growth in the first half of 2017 at 5.7%, the Malaysian economy is expected to expand by more than 4.8% in 2017. Domestic demand is projected to underpin this expansion. On the external front, exports are expected to benefit from the stronger-than-expected improvement in global growth,” Bank Negara Malaysia said last Friday.
Wall Street indexes and the U.S. dollar ended a volatile session lower (last Friday) after a week of drama in Washington intensified doubts about President Donald Trump's ability to deliver on pro-growth policy promises such as tax reform, according to Reuters.
After a late morning boost on Trump's firing of controversial White House strategist Steve Bannon, the dollar and U.S. equities lost their lustre as investors were left wary after a week in which Trump alienated potential allies, it said.
The Dow Jones Industrial Average fell 76.22 points, or 0.35 percent, to 21,674.51, the S&P 500 lost 4.46 points, or 0.18 percent, to 2,425.55 and the Nasdaq Composite dropped 5.39 points, or 0.09 percent, to 6,216.53, said Reuters.
AllianceDBS Research in its evening edition last Friday said despite the strong up close in the preceding day, the FBM KLCI had on Aug 18 opened the day on a negative note as market participants changed their game plan to selling.
It said under the persistent selling pressure, the benchmark index traded down to 1,770.04 before rebounding to settle at the day’s high of 1,776.22 (down 0.09 points or 0.01%) in the last few minutes buying of selective blue chip stocks.
“In the broader market, losers outnumbered gainers with 472 stocks ending lower and 357 stocks finishing higher. That gave a market breadth of 0.75 indicating the bears were in better control,” it said.
AllianceDBS Research said having made higher highs for 3 consecutive days, the market registered a lower low on Aug 18 with the benchmark index falling down to the low of 1,770.04.
“The change of game play pattern from buying (Aug 14 – 17) to selling (Aug 18) was believed to be largely due to the external negative market development.
“This can be explained from the way benchmark index reacted to this piece of negative news on opening bell.
“In other words, some market participants wasted no time to liquidate a portion of their stock positions in an attempt to lock in a smaller trading gain,” it said.
However, the research house said the benchmark index managed to keep its position above the 1,770 level.
It said following the marginal down close on Aug 18, there should be buying attempt again with immediate support at 1,770.
“The analysis of overall market action on Aug 18 revealed that buying power was stronger than selling pressure.
“As such, the FBM KLCI would likely trade above the 1,776.22 level on Aug 21,” said AllianceDBS Research.
Based on corporate announcements on Bursa Malaysia and news flow last Friday, companies that may be in focus today could include the following: Malaysia Building Society Bhd, Chin Well Holdings Bhd, IGB REIT, EG Industries Bhd, Oriental Interest Bhd, Ideal Jacobs Malaysia Corp Bhd, Tan Chong Motor Holdings Bhd, Konsortium Transnational Bhd, Genting Plantations Bhd, Tune Protect Group Bhd, Mlabs Systems Bhd, XOX Bhd, PRG Holdings Bhd, Elsoft Research Bhd, Serba Dinamik Holdings Bhd and Enra Group Bhd,