Knee-jerk reaction may drag down Bursa Malaysia next week

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KUALA LUMPUR (Oct 24): Bursa Malaysia is likely to see some knee-jerk reaction next week, pushing the FTSE Bursa Malaysia KLCI (FBM KLCI) downward and keeping it below the 1,500-point mark.

The barometer index, according to Bank Islam Malaysia Bhd, is expected to move in the range of 1,400 and 1,500 points as political uncertainty remains a concern among investors.

“Overall sentiment is expected to be weak with market participants cautiously awaiting the outcome of the meeting between Prime Minister Tan Sri Muhyiddin Yassin and the Yang di-Pertuan Agong Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah on Friday,” economist Adam Mohamed Rahim told Bernama.

Earlier yesterday, Muhyiddin chaired a special Cabinet meeting in Perdana Putra, Putrajaya, to discuss current issues and government affairs.

Persistent selling was seen in mid and small-cap stocks on Friday, leading to decliners trouncing advancers 894 to 311, while 352 counters were unchanged, 610 untraded and 21 others suspended.

The decline, according to an analyst, was due to the uncertainties surrounding both the economic and political developments in the country with retail investors exiting the market.  

Despite this, index-linked stocks were supported by the institutional investors.

Meanwhile, on the external front, the US presidential election on Nov 3 is another factor that will influence markets as the winner will have his own set of policies that will determine how will Malaysia trade with the United States.

For the trading week just ended, the local bourse mostly moved in the red zone, dominated by the rising political unease and global resurgence of Covid-19 cases.

The local bourse was also tracking its Asian peers’ movement over the past week and influenced by Wall Street’s overnight performance, which was driven by the yet-to-be-finalised stimulus package.

Rakuten Trade, in a note, said hopes for the stimulus had yo-yoed over the past few weeks with the latest update being that an agreement would be finalised soon.

Meanwhile, CGS-CIMB Futures Sdn Bhd said as the Klang Valley entered the second week of Conditional Movement Control Order, retail investors were diving into the stock market and this was also due to the prevailing low interest rate, which was expected to be cut further in November.

“The four trading days this week up until Thursday recorded a volume of 35.75 billion, which was already 5.21% higher than last week’s volume of 33.98 billion,” it said.

On a Friday-to-Friday basis, the FBM KLCI ended 9.20 points lower at 1,494.64 compared to 1,503.84 previously.

On the scoreboard, the FBM Emas Index shrank 110.84 points to 10,827.23, the FBMT 100 Index contracted 108.59 points to 10,631.63 and the FBM Emas Shariah Index weakened 186.50 points to 12,954.11.

The FBM 70 shed 313.37 points to 14,258.34 and the FBM ACE lost 365.11 points to 10,606.77.

Sector-wise, the Financial Services Index declined 50.51 points to 12,359.16 and the Plantation Index eased 3.51 points to 6,855.00 but the Industrial Products and Services Index inched up 0.76 point to 144.36.

The Technology Index went up 32.37 points to 60.78 while the Healthcare Index gained 68.43 points to 4,021.86.

Weekly turnover expanded to 42.67 billion units worth RM25.89 billion from last week’s 33.97 billion units worth RM23.47 billion.

Main Market volume widened to 23.18 billion shares valued at RM20.43 billion versus 19.81 billion shares valued at RM17.91 billion previously.

Warrants turnover was higher at 4.82 billion units worth RM1.24 billion compared to 4.06 billion units worth RM988.80 million in the preceding week.

The ACE Market volume also grew to 14.66 billion shares valued at RM4.22 billion from 10.08 billion shares valued at RM4.57 billion.