BURSA MALAYSIA fell sharply last week on funds selling ahead of the long weekend holiday. The market opened higher yesterday but failed to follow through. The stronger ringgit and crude oil prices failed to lift market confidence. The benchmark FBMKLCI did not manage to stay above the immediate resistance level at 1,856 points it broke two weeks ago and hence, the chance of it climbing to historical highs has been stunted. After climbing to a seven-month high two weeks ago, the KLCI declined 1.5% in a short three-day week to 1,827.42 points on lower trading volume.
The average daily trading volume in the past one week was only 1.7 billion shares as compared with 2.3 billion shares two weeks ago. However, the average daily trading value was firm at RM2 billion. This shows that the market was dominated by institutions who favour higher-priced stocks and retail took a break ahead of the long weekend holiday. After weeks buying into the local market, foreign institutions turned net sellers last week.
From Monday to Thursday last week, net buying from local institutions was RM189.9 million. Foreign institutions’ net selling was RM181.8 million. The index was weighed down by oil and gas stocks and for the KLCI, decliners outpaced gainers 3 to 1. Top gainers of the KLCI were Genting Malaysia Bhd (+1.1% from last week), UMW Holdings Bhd (+1.1%) and Felda Global Ventures Holdings Bhd (+1.0%). Top three decliners of the index were MISC Bhd (-4.6%), Petronas Dagangan Bhd (-4.5%) and Petronas Chemicals Group Bhd (-3.7%).
Global markets’ performances were generally bearish in the past one week as confidence weakened after the markets failed to continue its bullish momentum last week. China’s Shanghai Stock Exchange Composite Index declined 4% in a week to 4,298.37 points. Hong Kong’s Hang Seng Index fell 2.4% to 27,755.54 points. Singapore’s Straits Times Index declined 0.7% to 3,471.19 points. The Japan market was closed yesterday for a holiday but was 19,531.63 points last Friday, 2.6% lower.
The US dollar started to strengthen against major currencies after weakening for the week, and this caused European markets to fall into a correction and the US market remained buoyant. The US’ Dow Jones Industrial Average closed marginally higher from the previous week at 18,070.40 points on Monday. Germany’s DAX Index fell 3.5% to 11,619.85 points. London’s FTSE100 fell 1.5% to 6,982.17 points last Friday as the market was closed for a holiday on Monday.
The US Dollar index declined from 96.94 last week to 95.64 points after rebounding from a low of 94.71 last Thursday. The Malaysian ringgit weakened against the US dollar from RM3.53 per US dollar to RM3.61. COMEX gold declined 1.1% in a week to US$1,187.30 an ounce on stronger US dollar. WTI crude oil increased 4% to US$59.02. Crude palm oil on Bursa Malaysia rebounded and increased 3% to RM2,156 per tonne in a week after rebounding from its lowest level in 7 months last Wednesday.
The FBMKLCI broke below the immediate support level at 1,836 points and the short-term 30-day moving average. It also broke below the short-term up trend line support level. This indicates that the trend has turned bearish in the short term. Momentum indicators have turned bearish as well as indicators like the RSI and MACD fell below their mid-levels.
However, the index is currently supported by the long-term 200-day moving average at 1,818.0 points. The index tested this level twice in the past two trading days. Furthermore, the index is above the Ichimoku Cloud and this indicates that the trend is still bullish in the long term.
While the trend is bearish, we expect a technical rebound this week as the index is at the 200-day moving average support level. We expect the index to test the broken 30-day moving average at 1,837.0 points if there are no negative catalysts. A break above this level could boost some confidence but failure to climb above this level could put more pressure to the market. A break below the 200-day moving average could spell further declines for the market. Next support level is at 1,770 points.
Benny Lee is chief market strategist for Jupiter Securities Sdn Bhd. Jupiter Securities is a participating broker in Bursa Malaysia. He can be contacted at [email protected]. The views expressed in the article are the opinions of the writer and should not be construed as investment advice. Please exercise your own judgement or seek professional advice for your investment decisions.
This article first appeared in The Edge Financial Daily, on May 6, 2015.