Bursa Malaysia eases as profit taking emerges

Publish date: Fri, 25 Nov 2022, 07:36 PM
KUALA LUMPUR: Bursa Malaysia, after Thursday's spectacular relief bounce followed by a retreat on Friday, should be on the uptrend again next week as bargain-hunting resumes, analysts said.
 
The near-term outlook is also bullish for the ringgit, which became Asian currencies' best performer for a second day.
 
The local currency rose by as much as 0.9 per cent against the US dollar on Friday to 4.4542, its strongest level since mid-August. 
 
The currency had surged 1.8 per cent to 4.4910 after Datuk Seri Anwar Ibrahim's appointment as Malaysia's 10th prime minister on Thursday, the largest single-day gain since March 2016.
 
Market observers are also optimistic that capital flows will return in the near term while the demand for bonds is expected to improve going forward, partly due to political clarity in Malaysia.
 
Rakuten Trade Sdn Bhd expects Bursa's benchmark FBM KLCI to trade between 1,500-1,530 level next week and foreign funds to emerge amid bargain-hunting activities.
 
"Though we anticipate buying to be widespread, we reckon the focus will centre on the banks and telcos in particular plus technology stocks that will excel amid the less aggressive interest rate hike in the US, head of research Kenny Yee Shen Pin said in a note.
 
Yee maintained Rakuten Trade's year-end FBM KLCI target at 1,580 for now as valuations for the local bourse should experience some upside readjustments.
 
On Friday, the key index was slightly easier in the morning as profit-taking started to emerge following the 4.04 per cent or 58.38 point-gains on Thusrday following the appointment of Datuk Seri Anwar Ibrahim as Malaysia's 10th prime minister.
 
At 9.06am, FBM KLCI slipped 0.26 of-a-point to 1,501.62 from 1,501.88 on Thursday. The market bellwether opened 0.18 of-a-point lower at 1,501.7.
 
FBM KLCI then retreated to below the 1,500-psychological mark at mid-morning, due to profit-taking following yesterday's strong gains as well as a weak external front. 
 
At 11.05am, the index fell 13.4 points to 1,488.48, before shedding 1.02 per cent or 15.34 points to end the day at 1,486.54. 
 
Losses in technology stocks namely Maxis Bhd, Digi.Com Bhd and Axiata Group Bhd, dragged the composite index down amid renewed concerns about China's zero-Covid-19 policies' risk to global growth. 
 
SPI Asset Management managing director Stephen Innes said a more attractive Malaysian stock setup heavily depended on expectations around China's reopening. 
 
"Fading concerns around renewed restrictions would give opportunities to buy Malaysian assets. So I think the market remains tentatively optimistic in Malaysian assets," he said.
 
On the local currency, Innes said the stronger ringgit due to moderating US Federal Reserve's (Fed) stance was a signpost for better things. 
 
However, he said sentiment was getting held back by the surge of Covid-19 in China. 
 
"However, I expect investors to buy into any hawkish Fed sell-off after all peak Fed is in the cards," Innes added.
 
Kenanga Investment Bank Bhd said the ringgit was expected to be supported by optimism in the near term following the political breakthrough and the Fed's less hawkish guidance.
 
"We revise the US dollar-ringgit year-end forecast slightly upwards to 4.54 from 4.57," the research firm said in a note.
 
Meanwhile, UOB Research said the ringgit was highly correlated to movements of the Chinese yuan against the US dollar from April till about mid-November.
 
"This is not surprising given that China is one of the key trade partners of Malaysia. A sooner-than-expected easing of China's Covid-19 measures and new measures to support its troubled property sector after the 20th Chinese Party Congress helped stabilised sentiments in the yuan since early November. 
 
"That has also spilled over positively to the rest of Asia foreign exchange (forex), ringgit included."
 
The firm added that as China transited into a more targeted and less prohibitive virus containment model, a firmer economic recovery in the country next year would likely be a strong tailwind for Asia forex, cushioning them from expected recessions in the US, the UK and the European Union. 
 
"Another potential domestic catalyst for ringgit include political resolution that paves the way for pro-growth policies and domestic reforms and further Overnight Policy Rate hikes," UOB Research said.
 
 - Bernama
 
Discussions
Be the first to like this. Showing 0 of 0 comments
Post a Comment