KLCI sustains upward momentum ahead of US rate decision

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KUALA LUMPUR (Sept 17): The FBM KLCI gained 34.39 points or 2% after the Malaysian government’s announced several economic measures, which included a RM20 billion allocation for state-owned fund manager Valuecap Sdn Bhd to buy undervalued shares here.

At 5pm, the KLCI closed at 1,681.54 on gains in stocks like Genting Bhd and Kuala Lumpur Kepong Bhd. Both stocks were leading gainers across Bursa Malaysia.

On Tuesday (Sept 15), the KLCI rose 7.52 points to settle at 1,647.15. Yesterday (Sept 16), Malaysian markets were closed for the Malaysia Day holiday.

Today, a remisier said the recent economic measures announcement by the government to address
global volatility could still be the driving factor behind the KLCI’s uptrend.

“I think the market is still continuing its momentum from earlier this week, when the government announced the economic measures to support the local market.

"Most of the KLCI component stocks saw gains," he told theedgemarkets.com.

He said the upcoming US Federal Open Market Committee's (FOMC) interest rate decision would determine the direction of the global markets, going forward.

The FOMC will decide whether to raise interest rates, following the conclusion of a two-day meeting today. A rate hike does not bode well for emerging Asian economies' currencies, shares and bonds, due to demand for US dollar-denominated assets.
Reuters however reported that world stocks inched to a three-week high on Thursday, while the dollar drifted lower against other currencies as investors consolidated positions, ahead of a nail-biting U.S. Federal Reserve interest rate decision.

There was a sense of relief as much as anything that after months of market speculation and advice from almost everyone from the IMF to the heads of the world's top companies, that the wait for the Fed's verdict would be over by 1800 GMT.

In Malaysia, sustainability of the KLCI's upward trend will be closely watched. The remisier said: “So far, the local market is temporarily bullish, but it is unclear if the upward trend will be sustainable, moving forward. The index will be testing the 1,700 resistance level in the near-term."

Today, Bursa Malaysia saw 2.24 billion shares, valued at RM3.14 billion, exchanged. Gainers outnumbered decliners at 672 against 226, while 286 counters were unchanged.

KLCI-linked put warrant FBMKLCI-HS led decliners. The most actively-traded counter was KLCI-linked call warrant FBMKLCI-C12.

Asian markets were mixed. Japan’s Nikkei 225 rose 1.43%, while South Korea’s Kospi gained 0.05%. Hong Kong's Hang Seng fell 0.51%.

Reuters reported that Hong Kong's benchmark Hang Seng Index surrendered early gains of as much as 1% and ended Thursday lower, dragged by a last-hour slide in mainland stocks, as investors awaited the U.S. Federal Reserve's policy decision later in the day.

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