KUALA LUMPUR (Nov 20): Malaysian shares may gain from institutional demand for higher-yielding emerging Asian market assets after minutes of the US Federal Reserve's latest meeting indicate low interest rates may remain for some time.
Low US rates may prompt capital flows into emerging economies offering higher interest rates.
In the US, Reuters reported that the Federal Reserve minutes said "a couple of members suggested including language in the statement indicating that recent foreign economic developments had increased uncertainty or had boosted downside risks to the U.S. economic outlook."
Yesterday, Malaysia's FBM KLCI rose 6.01 points or 0.33% to close at 1,824.39. The KLCI had extended gains after climbing 11.9 points or 0.66% last Tuesday (November 18).
Today, the KLCI may also take the cue from a weakening ringgit against the US dollar. The spotlight could be on index-linked plantation shares in anticipation that a weaker ringgit would lead to higher demand for Malaysian crude palm oil (CPO).
This is because a weaker ringgit makes CPO more attractively priced in international markets. The ringgit has weakened to RM3.3600 from RM3.3355 a week earlier.
From a technical viewpoint, AllianceDBS Research Sdn Bhd wrote in a note that the KLCI was expected to rise further today following yesterday's gains.
The KLCI's immediate upside hurdle is seen at 1,830 points, according to AllianceDBS.
"The analysis of overall market action on 19 Nov 2014 revealed that buying power was stronger than selling pressure. As such, FBMKLCI would likely trade above the 1,827.40 level on 20 Nov 2014.
"A crossover of 1,830 should see the benchmark index gearing towards the next hurdle at 1,860," AllianceDBS said.