KUALA LUMPUR – The local bourse is likely to usher in the first trading week of 2021 in cautious mode, as investors seek fresh market catalysts.
Oanda senior market analyst Jeffrey Halley said the trajectory of Covid-19 cases in the country continues to weigh on Bursa Malaysia sentiment, and is likely to persist in the coming week unless a marked improvement is seen over the New Year break.
He noted that gains will be capped at 1,660, with the FTSE Bursa Malaysia KLCI (FBM KLCI) potentially dropping to 1,620.
At these levels, and with investors returning to work, he said, value buyers should emerge, putting a floor under further sell-offs.
“If US Republicans hold Georgia in the Senate election on Wednesday, equity markets should rally, lifting Bursa Malaysia, too,” he told Bernama, adding that the 1,700 level should be broken this month, but unlikely to happen next week.
“The 1,700 level is more likely to be tested in the second half of the month.”
Halley said regional equities elsewhere will need to rally, and Malaysia has to avoid a post-holiday spike in infections for that to happen.
“The main factor driving markets next week is the Georgia Senate election in the US on Wednesday. A surprise win by the Democrats will likely provoke a sharp retreat by equities globally.
“However, I expect the effects to be transitory, and for Malaysia’s equity rally to resume in earnest in the second week of January, presuming that the Covid-19 situation domestically does not deteriorate badly. Large-scale lockdowns will delay the rally resumption.”
Bursa trading was range-bound this week, driven mainly by year-end window-dressing activities.
On Thursday, the key index was weighed down by persistent selling activities in heavyweights including Sime Darby Plantation Bhd (SDP), which saw a ban imposed by US Customs and Border Protection (CBP) on its products over allegations of forced labour in the production process.
SDP lost 18 sen to RM4.99, while the Plantation Index trimmed 109.97 points to 7,302.84.
In September last year, CBP issued a withhold release order against FGV Holdings Bhd.
On a Thursday-to-Thursday basis, FBM KLCI decreased 13.96 points to 1,627.21, from 1,641.17 last week. – Bernama, January 2, 2021
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