KUALA LUMPUR (July 2): Bursa Malaysia will likely move on a downward trend next week, easing to 1,430 points from the current 1,450 points as most stocks are still struggling to find their next direction, while traders are reassessing the worsening economic outlook amid aggressive interest rate increase and high global inflation.
Inter-Pacific Asset Management Sdn Bhd executive director and fund manager Datuk Nazri Khan Adam Khan said this was due to fresh signs of global growth concern, the potential economic slowdown in the United States (US) and European Union (EU), ‘stubbornly’ high inflation and hawkish US Federal Reserve (Fed) statement.
“This will accelerate the downside momentum and might prolong the high inflation period longer than expected.
“Besides, the market mode is also dominated by the expectation that global central banks' easy monetary policy to support economic growth is gone.
“This means that global banks do not have the power anymore to support economic growth,” he told Bernama.
However, despite the challenges, the reopening of economic sectors and the easing of more Covid-19 related restrictions in China could cushion the negative impact in supporting the local stock market, given that China is Malaysia's major trading partner, said Nazri Khan.
“Another encouraging development is that Bursa Malaysia continues to be resilient, as it outperforms the rest of the world’s markets.
“In one year's time, we (the FBM KLCI) is only down by -2%, compared with the US stock market, which is down by 33%,” he said.
This is also supported by the government's ongoing effort to ensure sound and well-capitalised banks as well as the effort to push for a digital and green economy.
Apart from that, the firmer Brent crude also bodes well for the local stock market as roughly 30% of the shares on Bursa Malaysia are linked to commodities.
Meanwhile, Nazri Khan said most of the institutional players would be waiting for the next corporate earnings season to see whether inflation, consumers' sentiment and interest rate policy would eat up the companies’ profits before jumping into the equity market.
“In other words, they are holding up for now to assess the situation and impact of earnings in August,” he added.
For the week just ended, the local bourse was mostly traded mixed on buying interest in selected blue chips, while also tracking the performance on Wall Street which was mostly subdued on concerns over global inflation and economic growth.
On Friday, the FBM KLCI was 0.38% or 5.52 points higher to finish at 1,449.74 from Thursday's close of 1,444.22.
On a weekly basis, the benchmark index was 13.04 points better from 1,436.70 at the end of the previous week.
On the index board, the FBMT100 Index advanced 61.53 points to 10,059.71, the FBM Emas Shariah Index rose 66.34 points to 10,480.98, the FBM Emas Index increased 58.49 points to 10,315.88, the FBM ACE perked up 14.63 points to 4,784.52, but the FBM 70 weakened 40.16 points to 12,403.54.
Sector-wise, the Plantation Index gained 6.99 points to 6,924.72, the Industrial Products and Services Index went down 1.59 points to 181.69, and the Energy Index was up 6.99 points to 684.48.
The Financial Services Index soared 92.36 points to 16,056.81, the Healthcare Index fell 8.75 points to 1,640.99, and the Technology Index inched eased 0.71 of-a-point to 61.91.
Weekly turnover was lower at 11.09 billion units worth RM7.95 billion against 12.96 billion units valued at RM8.49 billion last week.
Main Market volume narrowed to 7.15 billion shares valued at RM6.92 billion from 7.81 billion shares worth RM7.07 billion in the previous week.
Warrants volume shrank to 2.14 billion units worth RM444.94 million versus 2.41 billion units valued at RM1.41 million previously.
ACE Market volume fell to 1.77 billion shares valued at RM589.15 million from 2.73 billion shares valued at RM907.96 million the week before.