KUALA LUMPUR – The FTSE Bursa Malaysia KLCI (FBM KLCI) is expected to trade sideways next week, with the level of resistance at between 1,600 and 1610 points.
Market players will monitor the country’s April industrial production index, to be released by the Statistics Department, and the European Central Bank’s (ECB) policy rate meeting.
Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said the holiday-shortened week will contribute further to the market lull, as there seems to be no fresh catalyst.
The local bourse will be closed on Monday in conjunction with the official birthday of Yang di-Pertuan Agong Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah.
“Looking ahead next week for the domestic front, the Statistics Department will release the industrial production index data for the month of April, which is expected to continue to grow in line with the ongoing recovery in external demand,” Adam told Bernama.
“Globally, investors will focus on ECB’s policy rate meeting on Thursday. The bank must decide on the pace of bond purchases, and hints from policymakers suggest there is little appetite to cut support even if the bloc is firmly on the rebound.”
SPI Asset Management global managing partner Stephen Innes said United States President Joe Biden’s move to raise the number of Chinese companies blocked from American investment to 59 effective August 2 will create a negative impact for certain local stocks, especially those in the electrical and electronics counters.
“This is similar to a mini (US-China) trade war.”
Biden on Thursday signed an order amending a ban on US investment in Chinese companies, affecting 59 firms with ties to Beijing’s military or surveillance industry, including Huawei Technologies and the nation’s three biggest telecommunications corporations.
The local technology index declined 1.1% a day after the announcement.
“Market jitters emerged with regard to demand for Malaysia’s semiconductor components from China, pulling the Bursa Malaysia Technology Index down 1.1%, making it the second-biggest decliner among sectoral indices after the Bursa Malaysia Healthcare Index,” said Adam.
CGS-CIMB Securities Sdn Bhd in a note said based on FBM KLCI’s historical data, the benchmark index’s performance tends to be positive in June, with an average month-on-month (m-o-m) gain of 0.3% over the past 10 years, and 0.6% m-o-m returns over the past 43 years.
“This month, investors’ attention will be on the outcome of the US Federal Open Committee Meeting on June 15 and 16; the 18th Organisation of the Petroleum Exporting Countries meeting on July 1; further details on the Pemerkasa Plus stimulus package; and, the impact of the full movement control order from June 1 to 14 on Malaysia’s gross domestic product.”
Globally, investors will keep an eye on the number of new Covid-19 cases in India and the rest of the world, in addition to vaccine roll-outs.
Also in focus are 10-year US Treasury yield rate movements.
Health Director-General Tan Sri Dr Noor Hisham Abdullah yesterday reported 7,748 fresh coronavirus infections, taking Malaysia’s total to 515,571.
For the just-ended trading week, FBM KLCI moved between 1,568.47 on Monday, ahead of the lockdown, and 1,599.72 on Thursday.
The index narrowed 15.99 points to 1,578.45 at yesterday’s close from 1,594.44 a week earlier.
Bursa finished the week in the red with losses led by healthcare-linked counters, which tumbled after the national inoculation programme kicked into high gear, with the highest number of daily doses administered yesterday.
However, FBM KLCI benefited from crude oil hitting its highest price since October 2018. – Bernama, June 5, 2021
