PETALING JAYA: Bursa Malaysia is likely to remain under pressure heading into the second half of 2019 (2H19), where the 126-month cycle is scheduled to find a “bottom”, according to CGS-CIMB head of retail research Kong Seh Siang.
Based on his Elliott Waves model, Kong believes that the FBM KLCI may fall below 1,600 points, 2015 low of 1,503 points or even the 200-month exponential moving average (EMA) of 1,419 points currently.
Kong is also bearish on the FBMEMAS and FBM Small Cap Index this year, even though there may be a fairly decent bounce sometime this year.
However, he is bullish on the outlook for crude palm oil (CPO) price as CPO’s 10-year consolidation could be over and the commodity is at the start of a multi-month rally.
As long as prices remain above the recent swing low of RM1,940 per tonne (which is also its 52-week low), he reckons that the new uptrend may take prices up to the RM2,500-2,800 levels in 2019/2020.
In a longer term, a move beyond RM3,202 would open the door for a rally to new highs, possibly hitting the RM5,000 mark, he added.
His bullish view on CPO price is also broadly in line with the research house fundamental view for CPO price to average RM2,400 per tonne in 2019, an increase of 8% year-on-year.
CGS-CIMB has removed UMW Holdings from its top pick list following the strong share price performance. Its top three picks for Malaysia continue to be Astro Malaysia Holdings Bhd, Dialog Group Bhd and Malaysian Pacific Industries Bhd.
On global markets, Kong believes that the Dow Jones Industrial Average is at its tail-end of its 86-year rally, noting that there are several negative signals present at the moment.
However, he is bullish on the US dollar, and expects the greenback index to climb above the 100.00 mark late this year after a brief pullback in the upcoming months.
For Brent crude oil, he expects prices to stay within the US$55-$70 per barrel band.
In Asia, the Nikkei 225 and Shanghai Composite Index look bearish for the long haul but there is likely a strong bounce for these indices in the middle of the year.
The most bullish index in the region is the Jakarta Composite Index, where a new 52-week high is possible in 2019.
Source: The Sun Daily