KUALA LUMPUR: Bursa Malaysia will likely trend lower next week amidst uncertainty over the outcome of the United States-China trade talks.
Phillip Capital Management senior vice-president (investment) Datuk Dr Nazri Khan Adam Khan said the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) was now ripe for a pullback towards a lower support level range of 1,700-1,710 points.
“Investors have their fear levels heightened with the March 1 deadline nearing, as it could potentially lead to the United States increasing tariffs on US$200 billion worth of Chinese products, which could be avoided if the two economic powerhouses of the world reach a consensus.
“However, a stronger ringgit, rising commodity prices and a positive outcome from the China-Malaysia negotiation on the East Coast Rail Link (ECRL) should cap any temporary weakness in the local equities market,” he told Bernama.
Nazri Khan said strong economic cooperation between Malaysia and China had resulted in both countries resuming talks on the ECRL project to reach a win-win outcome, and a positive conclusion would boost the infrastructure sector as a direct result of growing confidence of local and foreign investors.
From a technical perspective, he said, the FBM KLCI chart showed an encouraging momentum, with the bullish bias remaining strong above the 1,700-level and the immediate strong resistance being at 1,750 points.
During the week, the FBM KLCI recorded a bullish pattern in line with regional equities and breached the 1,700 level on Tuesday as investors were optimistic that the latest round of trade talks between China and the United States would lead to a deal to resolve their tariff war.
The FBM KLCI last rose above the 1,700 level on Nov 26 last year, when it hit 1,701.99.
On a Friday-to-Friday basis, the benchmark FBM KLCI settled 32.59 points higher at 1,721.42.
The FBM Emas Index was 252.23 points higher at 12,002.50, the FBMT 100 Index increased 245.98 points to 11,858.88 and the FBM Emas Shariah Index jumped 289.51 points to 11,953.11.
The FBM 70 surged 387.27 points to 14,415.46 and the FBM Ace Index rose 68.89 points to 4,715.48.
Sector-wise, the Financial Services Index gained 208.16 points to 17,840.72, the Plantation Index increased 77.67 points to 7,413.10 and the Industrial Products and Services Index inched up 4.90 points to 168.03.
Weekly turnover rose to 15.75 billion units worth RM12.61 billion from 14.85 billion units valued at RM9.78 billion.
Main Market volume declined to 10.84 billion shares valued at RM11.56 billion from 11.05 billion shares valued at RM8.99 billion.
Warrants turnover increased to 3.10 billion units worth RM683.63 million from 2.27 billion units worth RM480.02 million.
The ACE Market volume improved to 1.80 billion shares valued at RM366.49 million from 1.52 billion shares valued at RM305.71 million.
The gold futures contract on Bursa Malaysia Derivatives is likely to extend its downtrend next week, pressured by the optimism over the US-China trade talks.
Phillip Futures Sdn Bhd dealer Chang Hui Ying said demand for gold was expected to remain subdued as the precious metal was largely used as a safe-haven asset amid political uncertainty.
“Besides, the gold price is also anticipated to be weighed by the US Federal Open Market Committee’s (FOMC) Jan 30-31 meeting minutes released on Thursday,“ she told Bernama.
Chang said the FOMC minutes, which showed that the US economy remaining strong, were also likely to continue prompting investors to dump safe-haven assets like gold and opt for riskier assets.
She added that the local gold futures were also likely to be influenced by the benchmark New York Commodity Exchange (Comex) gold futures’ performance next week.
For the week just ended, the local gold futures were traded higher in the first three days but succumbed thereafter to finish the week lower, mainly hampered by the hawkish FOMC minutes and positive trade talks progress.
On a Friday-to-Friday basis, spot month February 2019 and March 2019 added 28 ticks to RM173.60 per gramme, respectively, while April 2019 and May 2019 were each 23 ticks higher at RM173.65 and RM173.75 per gramme, respectively.
Weekly turnover narrowed to three lots worth RM52,330 from four lots valued at RM68,820 in the previous week, while open interest widened to 23 contracts from 22 contracts previously.— Bernama
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