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KUALA LUMPUR (Dec 5): The FTSE Bursa Malaysia KLCI (FBM KLCI) will trade between 1,640 and 1,650 next week, bolstered by decorating activities expected to begin then.
However, a knee-jerk reaction is expected on Monday, triggered by Fitch Ratings downgrading Malaysia’s long-term foreign currency issuer default rating (IDR) to ‘BBB +’ from ‘A-‘ with a stable outlook.
Inter-Pacific Asset Management Sdn Bhd CEO Datuk Dr. Nazri Khan said December had historically been a positive month for the FBM KLCI; therefore you can see the market is slowly rising from before.
He said that among the positive catalysts for the market going forward were optimism about Covid-19 vaccines and the government budget for 2021, better-than-expected third-quarter results, as well as continued interest in stocks from companies seen as beneficiaries of an anticipated economic recovery. .
“We are flooded with liquidity and more is coming. The foreign influx for this week was much better, which means that we are on the way back to normality, ”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 fall as many investors rush to the bond market. The ringgit will also be negatively affected, but things can recover quickly after that, ”he said, adding that lingering political nervousness could also hamper sentiment in Bursa Malaysia.
In response to Fitch’s review, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said his 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 contract 6.1% in 2020 before rebounding 6.7% in 2021 due to base effects, a reactivation of infrastructure projects and a continued recovery of exports of manufactured products and raw materials.
The rating agency considers that the 2021 Budget targets of a deficit of 5.4% of GDP by 2021 and an average deficit of 4.5% of GDP from 2021 to 2023 are achievable.
On Friday, market sentiment soured after Perak Menteri Besar Datuk Seri Ahmad Faizal Azumu lost a vote of confidence motion that was presented against him at the state assembly session.
Therefore, Adam said that any further developments on the vaccine would be closely monitored.
During the week, the evolution of vaccines and oil prices have significantly influenced the performance of national stocks.
The market reacted negatively after Pfizer Inc drastically lowered its Covid-19 vaccine shipment target for the year. Earlier this week, the UK had authorized Pfizer’s vaccine for emergency use in that country starting next week.
The oil market received a boost with Brent crude hovering around US $ 50 a barrel, after the Organization of the Petroleum Exporting Countries and its allies agreed to ease total production cuts by a smaller amount than expected, as they would increase the daily production in 500,000. barrels in January.
From Friday to Friday, 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 rose 172.81 points to 11,493.96 and the FBM Emas Shariah index increased 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.
Regarding the sector, the financial services index rose 281.35 points to 14,517.45, the plantations index was 113.51 points stronger to 7,349.40 and the industrial products and services index added 11.31 points to 173 , 79.
The Technology Index rose 2.21 points to 67.14, the Energy Index gained 116.45 points to 919.81 and the Health 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 increased to 34.65 billion shares valued at 25.85 billion versus 20.46 billion shares valued at RM17.16 billion previously.
Warrant turnover expanded to 3.72 billion units worth RM687.85 million from 3.30 billion units worth RM586.75 million in the previous week.
ACE market volume contracted to 15.63 billion shares valued at RM4.85 billion from 19.39 billion shares previously valued at RM5.40 billion.
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