KUALA LUMPUR (May 9): The FBM KLCI is expected to stabilise and track sideways next week on the back of steadying global markets as well as several local developments, including the upcoming mega Malakoff Corporation Bhd initial public offering (IPO) and the tabling of the 11th Malaysia Economic Plan in Parliament later this month.
An April rebound in U.S. jobs growth boosted Wall Street and supported the dollar on Friday, while a surprise Conservative victory cast away fears of a hung British Parliament and sparked a rally in sterling and European stock markets, according to Reuters.
Global bond markets recovered for a second day, focusing on weak aspects of the latest U.S. jobs report, which may cause the Federal Reserve to be even more cautious toward ending its near- zero interest rate policy later this year, it said.
AffinHwang IB vice president and head of retail research Datuk Dr Nazri Khan said that Bursa Malaysia should stabilise and take a sideway track this week, after being squeezed by negative global economic data, Greece funding stalemate and bearish statement from USA Federal Reserve on asset valuation.
He said any weakness however should be cushioned by positive momentum from ringgit (w-o-w up 4.2% to 3.5650), brent oil price (w-o-w up 3.8% to USD69.20), the tabling of 11th Malaysian Economic Plan and the upcoming Malakoff mega IPO.
“We expect the floatation of biggest IPO (since 2012), Malakoff (set on May 15, raising RM2.7 billion and oversubscribed by 14 times) and the tabling of 11th Malaysian Economic Plan (set on May 21) to be two major catalysts to boost the broad local market.
Nazri, who is also president of the Malaysian Association of Technical Analayts, said that on the technical front, the FBM KLCI continued to slip further into the red to break below its 50-day SMA level.
He said the key index however had softly rebounded from its 200-day moving average level.
“Although buying momentum remains weak, oscillators such as Stochastic and RSI have flashed a crossover buy signal from oversold territories.
“Overall, the FBM KLCI has corrected a healthy 62 points or 3.3% on a declining daily volume after it hit seven month high on April 27 (1867.53),” he said.
Nazri said he expects Wall Street and Bursa to gradually stabilise and trend sideways with prospects for global monetary policy ease and domestic event to repair the negative sentiment.
“Given that, we expect Bursa to remain moderately cautious and continue to trade sideways with upside bias between 1820-1840 this week.
“Finally, we expect greater speculation on stocks linked to the 11th Economic Plan especially those related to KL Infrastructure, Islamic Finance and Green Economy,” he said.
Nazri said he believes huge size of allocation would be given under the last economic blueprint so as to push Malaysia to become a developed nation by January 2020.
“Traders should look at our Top 20 stocks that may benefit from the mega economic plan, rising ringgit and rising oil price namely Gamuda Bhd, IJM Corporation Bhd, Protasco Bhd, Ahmad Zaki Resources Bhd, Pintaras Jaya Bhd, MSM Malaysia Holdings Bhd, Frase & Neave Holdings Bhd, Dutch Lady Milk Industries Bhd, KPJ Healthcare Bhd, Time Dotcom Bhd, Berjaya Auto Bhd, Tasek Corporation Bhd, Perdana Petroleum Bhd, Alam Maritim Resources Bhd, Yinson Holdings Bhd, Petronas Dagangan Bhd, Petra Energy Bhd, Barakah Offshore Petroleum Bhd, Coastal Contracts Bhd and Dayang Enterprise Holdings Bhd,” he said.