FBM KLCI to trade higher next week on bullish divergence

KUALA LUMPUR: Bursa Malaysia is expected to trade higher next week on the back of bullish divergence.

Phillip Capital Management Senior Vice President (Investment) Datuk Dr Nazri Khan Adam Khan said this is a reversal pattern, which is an indication that the recent downtrend is nearing its end and the market is about to experience a fresh revival.

“The local bourse is expected to trend higher, remaining above the 1,600-point benchmark, which would also draw mild bargain hunting interest despite concerns over the global economic outlook amid the prolonged trade war,“ he told Bernama.

As the week just ended, the FTSE Bursa Malaysia (FBM KLCI) ended at a high note at 1,609.33, the highest since the slip on Aug 13 due to recession fears after Dow Jones Industrial Average slumped more than 800 points.

The local bourse persisted to break across the 1,600 resistance level backed by institutional support despite the backdrop of flattish regional markets as the trade war and recessions spooked investors

Going forward, Nazri said aside from continuous political turmoil in Hong Kong, the United Kingdom and Italy, investors are also cautiously awaiting US Federal Reserve chairman Jerome Powell’s speech at the annual Jackson Hole symposium about the outlook for interest rates.

The market would also react to the policies made during the G7 meeting in France over the weekend and the upcoming decision on whether or not Malaysia would remain in the World Government Bond Index (WGBI) in the coming week.

On Friday, the local market ended higher backed by institutional support in government-linked blue chips.

On a Friday-to-Friday basis, the FBM KLCI rose 10.11 points to 1609.33 from 1599.22.

Over the week, the market is was traded range-bound as the market was less enthusiastic pending further market direction especially from the Jackson Hole symposium and G7 meeting.

The FBM Emas Index recovered 78.04 points to 11386.15, the FBMT 100 Index added 73.68 points to 11,219.33 and the FBM Emas Shariah Index rose 80.97 points to 11,924.19.

The FBM 70 firmed 106.33 points to 14,180.45 and the FBM Ace Index declined 34.09 points to 4,555.63.

Sector-wise, the Financial Services Index expanded 130.82 points to 15,655.33, the Plantation Index advanced 83.32 points to 6,841.69 and the Industrial Products and Services Index inched up 0.85 point to 150.57.

Weekly turnover firmed to 10.32 billion units worth RM7.00 billion compared with 8.33 billion units valued at RM6.6 billion.

Main Market volume expanded to 6.95 billion shares worth RM6.28 billion from 5.38 billion shares worth RM5.99 billion.

Warrants turnover rose to 1.86 billion units worth RM421.67 million from 1.75 billion units worth RM449.52 million.

The ACE Market volume added 1.54 billion shares worth RM297.51 million from 1.17 billion shares worth RM187.90 million last week. – Bernama

Bursa Malaysia to trade higher next week on bullish divergence

KUALA LUMPUR, Aug 24 ― Bursa Malaysia is expected to trade higher next week on the back of bullish divergence. Phillip Capital Management Senior Vice President (Investment) Datuk Dr Nazri Khan Adam Khan said this is a reversal pattern, which is an…

US fines Deutsche Bank US$16m to settle China, Russia corruption charges

WASHINGTON, Aug 23 — Deutsche Bank has agreed to pay more than US$16 million (RM67 million) to settle charges that it violated US corruption laws by hiring relatives of foreign government officials in order to win or retain business, the US…

As bond e-trading takes off, debt sales business may be ripe for automation

LONDON, Aug 23 — With banks’ bond trading desks increasingly going electronic, another of the last bastions of old-school banking — the business of helping companies and countries raise capital — may be about to succumb to the tide of…

Asians stocks struggle ahead of Powell’s speech; yuan at fresh 11-1/2 yr low

TOKYO: Asian shares struggled to make headway on Friday as uncertainty over how much further the U.S. Federal Reserve would cut interest rates added to investors’ worries over slowing global growth.

With a trade war between the United States and China dragging on, and political tumult in Hong Kong, Italy and Britain adding to the tense backdrop, investors were keenly awaiting Fed Chair Jerome Powell’s speech at a gathering of central bankers in Jackson Hole, Wyoming, later in the day (1400 GMT).

MSCI’s broadest index of Asia-Pacific shares outside Japan edged 0.1% higher and was up 0.8% for the week, on track to break a four-week losing streak.

Japan’s benchmark Nikkei added 0.3% and Australian stocks rose 0.3%.

The Shanghai Composite and the blue-chip CSI300 were up 0.5% and 0.7%, respectively, while Hong Kong’s Hang Seng gained 0.5%.

Business surveys on Thursday suggested further slowing in advanced economies in August, but service sector activity remained resilient, offsetting some of the drag from weak manufacturing.

“It’s going to be another wait-and-see day for traders ahead of Powell’s Jackson Hole speech. Investors are hoping for some soothing words from him,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

Wall Street stocks were mixed on Thursday, with the S&P 500 closing little changed, while the Dow was up 0.2% and the Nasdaq falling 0.4%.

In the U.S. bond market, the closely watched two-year, 10-year Treasury yield curve briefly moved back into inversion overnight, a shift that also occurred last week and sent financial markets into a tailspin amid worries of a sharp global downturn.

An inversion in the U.S. yield curve has presaged several past U.S. recessions, raising fears the decade-long expansion in the world’s biggest economy might be nearing its end.

While markets overwhelmingly expect the Fed to follow up its first rate cut in a decade with more stimulus at its meeting next month, some policymakers disagree.

Kansas City Fed President Esther George, who dissented against the decision to ease in July, and Philadelphia Fed President Patrick Harker, who said he “reluctantly” supported the cut, both said the U.S. economy does not need more stimulus at this point.

Dallas Fed President Robert Kaplan said the businesses had become much more cautious due to surprises on trade policy and he was “going to at least be open-minded about making some adjustment” if he sees continued weakness.

All of that has made Powell’s speech in Jackson Hole pivotal for markets as they look for any clues on future easing, after the Fed last month cut rates for the first time since the financial crisis.

Any indications of hawkishness in the Fed chief’s comments might hurt riskier assets, though the dollar stands to benefit.

The greenback slipped on Thursday, but moved within narrow ranges. In early Asian trading, the dollar was up 0.1% against a basket of major currencies to 98.293.

The euro also was little changed against U.S. currency at $1.1073. A survey showing a surprise uptick in euro zone business growth for August was offset somewhat by trade war fears knocking future expectations to their weakest in over six years.

The pound jumped to a three-week high of $1.2273 overnight after traders interpreted comments from German Chancellor Angela Merkel to mean that a solution to the Irish border problem could be found before Britain leaves the European Union on Oct. 31.

Merkel on Wednesday challenged Britain to come up with alternatives to the Irish border backstop within 30 days, but French President Emmanuel Macron cautioned there would be no renegotiation of the Brexit deal. Sterling last quoted at $1.2234, 0.1% weaker on the day.

China’s yuan extended losses, threatening to stoke trade tensions between Washington and Beijing.

Spot yuan slid to as low as 7.0992 per dollar, its weakest since March 2008, although the central bank set the midpoint rate at 7.0572, its weakest level in 11-1/2 years, but was much stronger than traders had expected.

Washington labelled China a currency manipulator early this month after a sharp slide in the yuan.

Concern about China’s economy is growing because U.S. tariffs on roughly $150 billion of Chinese goods will take affect from Sept. 1.

Oil prices weakened overnight, with both Brent crude and U.S. West Texas Intermediate down 0.6% each, on worries about the global economy.

Brent crude was last up 0.3% at $60.11 per barrel and WTI crude added 0.2% to $55.46.

Gold prices dipped on Thursday but held near the pivotal level of $1,500 per ounce, underpinned by demand for the precious metal amid uncertainties around monetary policy, trade and geopolitical tensions. Spot gold was last down 0.2% at $1,494.99 an ounce. – Reuters

Asian stocks shaky before Powell's speech as growth woes weigh

TOKYO, Aug 23 ― Asian shares struggled to make any headway today as weak US manufacturing activity and uncertainty over how much further the Federal Reserve would cut rates added to the general air of caution in markets buffeted by global growth…

Wall Street falls after disappointing data, Fed policymakers dampen rate cut hopes

NEW YORK, Aug 22 — US stocks turned lower today as the first contraction in the manufacturing sector in nearly a decade and uncertainty about future interest rate cuts overshadowed an initial boost from upbeat retail earnings. IHS Markit said its…

Trump attacks, economic fears focus spotlight on Fed’s Powell speech

WASHINGTON, Aug 22 — When the leader of the Federal Reserve speaks, the world listens. But the relentless attacks by US President Donald Trump ensure Fed Chair Jerome Powell’s speech tomorrow will be subjected to an even more intense spotlight….

RAM: Central banks’ dovish stance to weigh on Malaysian bond yields

PETALING JAYA: Domestic bond yields continue to face downward pressure from the prospect of a low global interest rate environment and consequent search for yield, according to RAM Ratings.

The rating agency highlighted that over the past few months, a number of central banks have lowered their policy rates, which have tilted investors’ interest rate expectations downwards.

“As widely anticipated, the Fed had cut its policy rate band by 25 bps on 31 July 2019, albeit assuring investors that the cut does not mark the beginning of an easing cycle.

“Nevertheless, the market has so far priced in another rate cut in September amid global growth concerns,” it said in a statement today.

RAM said government bond issuance activity stayed robust in July with total Malaysian Government Securities and Government Investment Issue of RM10.5 billion against RM8 billion recorded in June.

Bid-to-cover ratios at government auctions are consistent with the robust demand seen in July, with all issues that were up for tendering achieving a ratio of above two times.

RAM said the shift in the interest rate landscape had sparked a renewed hunt for yields among foreign investors.

“Increased demand for higher-yielding bonds had led to a net inflow of RM5.7 billion into the Malaysian bond market in July versus RM6.6 billion in June.”

As a result, it led to a broad-based retreat in yields across the maturity spectrum and rating bands in July.

“We do not envisage this downward pressure to subside in August as investors remain on the lookout for more rate cuts by the Fed next month,” said the rating agency.

However, the prospect of a global growth slowdown and the fear of a looming recession signalled by an inverted US treasury yield curve, has the potential to dampen investor appetite for emerging market assets.

But, RAM said, the impact on Malaysia so far has been largely confined to the domestic equity market.

It noted that the FTSE Bursa Malaysia Composite Index has been on a downward trend since the start of July, while demand for fixed-income instruments led to a bond price rally during the month.

“Prevailing uncertainties and growing concerns over global growth momentum pave a path for further loosening of global liquidity conditions going forward. The hunt for yield in the emerging market assets will continue so long as an attractive yield differential is maintained, thus providing a counter to potential

rationalisation of passive investor flows in the market,” said RAM head of research Kristina Fong.

RAM sees more downward pressure on domestic bond yields

KUALA LUMPUR, Aug 22 — The prospect of a low global interest rate environment and consequent search for yields is expected to continue placing downward pressure on domestic bond yields, says RAM Ratings Services Bhd. In a statement,…