KUALA LUMPUR (Dec 5): The FTSE Bursa Malaysia KLCI (FBM KLCI) is set to trade between 1,640 and 1,650 next week, bolstered by window-dressing activities which are expected to kick off then.
However, a knee-jerk reaction is expected on Monday, triggered by Fitch Ratings’ downgrade of Malaysia's long-term foreign-currency issuer default rating (IDR) to 'BBB+' from 'A-' with a stable outlook.
Inter-Pacific Asset Management Sdn Bhd chief executive officer Datuk Dr Nazri Khan said December had historically been a positive month for the FBM KLCI; hence it may see the market rise slowly from previously.
He said among the positive catalysts for the market going forward were optimism over Covid-19 vaccines and the government’s Budget 2021, better-than-expected third quarter results, as well as continued interest in shares of companies seen as beneficiaries of an anticipated economic recovery.
“We are flush with liquidity and more is coming. Foreign inflow for this week was pretty much better, which means we are on the way back to normalcy,” he told Bernama.
Bank Islam Malaysia Bhd economist Adam Mohamed Rahim believes the knee-jerk reaction to the downgrade of Malaysia’s sovereign rating would be temporary.
“Possibly bond yields for Malaysian Government Securities will drop as many investors rush to the bond market. The ringgit too will be adversely impacted, but things may recover quickly after that,” he said, adding that lingering political jitters could also possibly hamper sentiment on Bursa Malaysia.
In responses to the Fitch revision, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said its decision did not give due justice and credit to Malaysia’s crisis response efforts and strong economic fundamentals.
Fitch also expects Malaysia’s Gross Domestic Product (GDP) to shrink by 6.1% in 2020 before rebounding by 6.7% in 2021 due to base effects, a revival of infrastructure projects and an ongoing recovery of exports of manufactured goods and commodities.
The rating agency is of the view that Budget 2021’s targets of a deficit of 5.4% to GDP for 2021 and an average deficit of 4.5% of GDP from 2021 through 2023, are achievable.
On Friday, market sentiment soured after Perak Menteri Besar Datuk Seri Ahmad Faizal Azumu lost a motion of confidence vote that was tabled against him at the state assembly sitting.
Hence, Adam said any further development on the vaccine would be watched closely.
During the week, vaccine developments and oil prices have significantly influenced domestic shares’ performance.
The market reacted negatively after Pfizer Inc slashed its Covid-19 vaccine shipment target for the year. Earlier this week, the United Kingdom had authorised Pfizer's vaccine for emergency use in that country from next week.
The oil market received a boost with the Brent crude hovering near US$50 per barrel, after the Organisation of the Petroleum Exporting Countries and allies agreed to ease total output cuts by a lesser amount than what was expected as they would increase the daily output by 500,000 barrels in January.
On a Friday-to-Friday basis, the FBM KLCI gained 14.26 points to 1,621.85 from 1,607.59 a week earlier.
On the scoreboard, the FBM Emas Index expanded 198.69 points to 11,740.72, the FBMT 100 Index climbed 172.81 points to 11,493.96, and the FBM Emas Shariah Index surged 238.26 points to 13,507.17.
The FBM 70 soared 509.16 points to 15,249.55 and the FBM ACE Index added 35.48 points to 10624.97.
Sector-wise, the Financial Services Index jumped 281.35 points to 14,517.45, the Plantation Index was 113.51 points stronger at 7,349.40, and the Industrial Products and Services Index added 11.31 points to 173.79.
The Technology Index inched up 2.21 points to 67.14, the Energy Index gained 116.45 points to 919.81 and the Healthcare Index lost 43.63 points to 3,922.73.
Weekly turnover increased to 54.02 billion units worth RM31.40 billion from 45.97 billion units worth RM23.18 billion last week.
Main Market volume rose to 34.65 billion shares valued at 25.85 billion versus 20.46 billion shares valued at RM17.16 billion previously.
Warrants turnover expanded to 3.72 billion units worth RM687.85 million from 3.30 billion units worth RM586.75 million in the previous week.
The ACE Market volume contracted to 15.63 billion shares valued at RM4.85 billion from 19.39 billion shares valued at RM5.40 billion previously.