KLCI expected to track higher next week in line with global rally

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KUALA LUMPUR (April 11): The FBM KLCI is expected to track higher next week on the back of the rally at global markets last week.

World equity markets tested record highs on Friday on hopes of more stimulus from top central banks, while the dollar strengthened on favorable government debt yields compared to those of most other developed countries, according to Reuters.

Wall Street scored solid gains after U.S. conglomerate General Electric Co. said it plans to sell assets and buy back up to $50 billion of its stock. This propelled GE shares to their highest since September 2008, ending up 10.8 percent at $28.51 in heavy volume, it said.

AffinHwang Capital IB vice president and head of retail research Datuk Dr Nazri Khan said Bursa Malaysia should take a higher track next week week, supported by a global boost in risk-taking sentiment, ideas that Fed rate hike will be delayed, supported by European mega stimulus and easing geopolitical tensions of Iran and no-loan-default of Greece.

Nazri noted that global stocks rallied to a record high last week, eclipsing the September 2014 peak, as European monetary stimulus spurred gains from Europe to Japan, while US equities traded near unprecedented heights.

“We are inspired with Bursa relative strength as the FBM KCLI maintained its bullishness into higher territory and remained largely unfazed by GST impacts, oil plunge and ringgit softness after scoring an impressive 84 points or 4.6% since 16th March 2015.

“On the domestic front, Bank Negara Reserves which stood at a healthy RM389.7 billion (US$105.1 billion) suggest a robust Malaysian fundamentals to finance 8.1 months of retained imports and is 1.1 times the short-term external debt,” he said.

Nazri said the announcement made by MITI Minister Datuk Seri Mustapa Mohamed in launching the Greater KL Principal Hub and detailed  fiscal incentives for foreign multinationals should be positive for corporate sentiment.

Nazri, who is also president of the Malaysian Association of Technical Analysts, said that on the technical front, most daily oscillators were pointing down after hovering at overbought situation, suggesting a new round of recharged bullish momentum.

He said the market close remains above the 20-day, 50-day and 200-day moving average suggesting firm uptrend across all time frames.

“The FBM KLCI has risen 82 points over the last four weeks (high-low range of 1774 to 1856) which mean we now expect the FBM KLCI to remain buoyant and maintain support above the 1830 and 1800 support level before retesting the next resistance levels at 1850 and 1880 levels,” he said.

Nazri said that overall the FBM KLCI should extend its bullish mode, mirroring global bullish market’s performance as the Fed is seen holding interest rate low for a longer term. 

“Strategy wise, aggressive investors should long index futures while conservative investors should generally accumulate our Top 20 Buys in April namely IHH Healthcare Bhd, KLCC Property Holdings Bhd, MISC Bhd, Petronas Chemicals Group Bhd, Petronas Dagangan Bhd, Public Bank Bhd, RHB Capital Bhd, Telekom Malaysia Bhd, Bursa Malaysia Bhd, Cahya Mata Sarawak Bhd, Coastal Contracts Bhd, Dayang Enterprise Holdings Bhd, Dialog Group Bhd, Yinson Holdings Bhd , UMW Oil and Gas Corporation Bhd,QL Resources Bhd, Sunway Bhd, Malaysia Building Society Bhd, Time Dotcom Bhd and Wetports Holdings Bhd,” he said.