Friday 29 Mar 2024
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THE market has been volatile but directionless  the past week. The FBM KLCI was dragged down by component heavyweight Tenaga Nasional Bhd (TNB) after its share price fell sharply on the government’s decision to lower the electricity tariff. But the price rebounded and, coupled with rising crude oil prices and a slightly stronger ringgit, the index closed marginally lower from last week. The KLCI declined only one point to 1,810.09 points after trading in a range between 1,780.21 and 1,812.08 points.

Market volume was lower the past week ahead of the long holidays starting tomorrow. Average daily trading volume declined from 2.2 billion shares two weeks ago to two billion shares in the past week. The market was supported by local institutions as foreign institutions started selling after a week of buying. Net buying from local institutions last week (Monday to Friday) was RM748.9 million while net selling from foreign institutions was RM677.7 million.

In the KLCI, gainers were on par with decliners. The top three gainers in the index were Felda Global Ventures Holdings Bhd (20.3% from last week), CIMB Group Holdings Bhd (3.9%) and Genting Malaysia Bhd (2.9%). The top three decliners were TNB (4.9%), MISC Bhd (1.9%) and Telekom Malaysia Bhd (1.6%).

Markets were generally bullish last week. After declining for two weeks, the Shanghai Stock Exchange Composite Index rose 3.4% in a week to 3,247.43 points. Hong Kong’s Hang Seng Index increased 1% to 24,784.88 points. Japan’s Nikkei 225 increased 1.9% to 17,991.66 points, the highest level in 9½ years. However, Singapore’s Straits Times Index pulled back from its highest level in 20 months last week and declined 0.5% to 3,415.91 points.

Last Friday, the US Dow Jones Industrial Average increased 1.6% in a week to 18,019.35 points (the US market was closed on Monday for a national holiday). London’s FTSE100 index increased only 0.1% to 6,855.31 points, near its 15-year high. but Germany’s DAX Index increased 2.4% to 10,923.23 points after pulling back from a record close at 10,963.40 points last Friday. The US dollar was marginally lower, falling from 94.6 points a week ago to 94.4 points. The ringgit was marginally stronger against the greenback, from 3.58 a week ago to 3.57 to a US dollar.

The bearish trend in gold continued amid marginally last week as strong equity markets performances garnered more attention. Commodity Exchange gold declined 0.6% to US$1,230 (RM4,415) an ounce. Crude oil remained firm and the New York Mercantile Exchange West Texas Intermediate crude rose 0.7% to US$52.78 per barrel. Crude palm oil futures on Bursa Malaysia pulled back after s strong rebound two weeks ago and declined 0.7% in a week to RM2,284 per tonne.

Technically, the KLCI remained bullish but weak. It remained above the short-term 30-day moving average and the Ichimoku Cloud indicator. However, the index still did not manage to overcome the long 200-day moving average and the immediate resistance level at 1,830 points. This indicates that the market is being cautious and this is expected before the long weekend holiday starts.

The momentum of the bullish trend is weak as momentum indicators were unable to climb higher. The MACD indicator has just crossed slightly below its moving average and the RSI indicator is forming a bearish divergence. Furthermore, the Bollinger bands are starting to contract despite the index staying above its middle band.

Despite the coming holidays, the market still managed to remains firm and this indicates strong market confidence. If there are no negative catalysts in the global markets and economy, we may see the index trend higher after the holidays. Nevertheless, the index has to break above the immediate resistance level at 1,830 points to boost market confidence and for the bullish trend to continue. The trend is expected to remain bullish as long as the index stays above the immediate support level at 1,780 points.

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I would like to take the opportunity to wish Gong Xi Fa Cai to all those who are celebrating the Chinese New Year and happy holidays to all. May the year of the goat bring more prosperity to the market.

Benny Lee is chief market strategist for Jupiter Securities Sdn Bhd. Jupiter Securities is a participating broker in Bursa Malaysia. He can be contacted at [email protected]. The views expressed in the article are the opinions of the writer and should not be construed as investment advice. Please exercise your own judgement or seek professional advice for your investment decisions.

This article first appeared in The Edge Financial Daily, on February 18, 2015.

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