KUALA LUMPUR – The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) is expected to trade range-bound next week as investor sentiment is likely to remain cautious although bargain hunting may prevail, said an analyst.
Rakuten Trade Sdn Bhd vice-president of equity research Thong Pak Leng expects the FBM KLCI to hover within the 1,520-1,540 range going forward.
Commenting on Bank Negara Malaysia’s (BNM) recent decision to maintain the Overnight Policy Rate (OPR) at 1.75%, he said that “it’s good to maintain a low interest rate during the economic recovery period. It gives some buffer space for people to prepare for a possible hike in the near future”, he said.
Yesterday, the Statistics Department announced that the Consumer Price Index (CPI) in December 2021 increased 3.2% to 124.5 against 120.6 in the same month of the preceding year due to the rise in food and fuel prices.
Chief statistician Datuk Seri Mohd Uzir Mahidin said the increase also surpassed the average inflation rate from 2011 to 2021 of 1.9%.
During the week just ended, Bursa Malaysia trended lower, tracking regional markets amid heightened market volatility in the region.
The market was closed on Tuesday for the Thaipusam public holiday.
On Monday, local technology stocks were under selling pressure as concerns over interest rate hikes in the United States and overstretched valuations continued to put pressure on the sector.
Meanwhile, oil prices hit their highest level in more than seven years on Tuesday as traders were worried that the attack on a fuel storage facility in the United Arab Emirates would affect supply.
Brent crude rose almost 1% to hit US$87.22 (RM365.15) a barrel. Price rises were even steeper in the US, where the West Texas Intermediate crude increased by 1.3% to US$84.89 a barrel.
On a Friday-to-Friday basis, the FBM KLCI fell 28.27 points to end the week at 1,527.06 from 1,555.33 last week.
On a separate development, the ringgit is expected to linger at the current 4.18 level versus the US dollar as investors would be weighing on the outcome of the US Federal Open Market Committee (FOMC) meeting next week.
The main underlying issue continues to revolve around a possible earlier interest-rate hike in the US with a slew of Federal Reserve officials rooting for the removal of monetary policy accommodation.
As such, the US FOMC meeting on January 25 and 26 will be the main focus next week, Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said.
Having said that, he said the stance by BNM’s Monetary Policy Committee (MPC) on economic conditions could well drive an uptrend for the ringgit throughout this year.
“Judging from the MPC meeting (on Thursday), BNM is comfortable with the present state of the economy. Should it continue to remain so, there could be a chance that the OPR will be raised at some point this year,” he noted.
At the first MPC meeting for 2022, the central bank kept the OPR unchanged at 1.75%, with a likely 25 basis points increase in the second half of 2022.
BNM’s continuous positive tone and latest inflation data have helped the ringgit trade firmer on Thursday and yesterday.
Overseas, the sharp rise in US Treasury yields, equities sell-off, and China’s cutting down on their policy rate were amongst the key factors that affected the currency market this week.
The ringgit trended mixed versus the greenback throughout the trading week.
It finished the week lower at 4.1840/1870 against the US dollar compared with 4.1765/1795 at the previous Friday’s close.
The local currency was also traded lower against other major currencies on a Friday-to-Friday basis.
It depreciated against the Singapore dollar to 3.1096/1121 from 3.1045/1070 on the previous Friday and weakened vis-a-vis the Japanese yen to 3.6715/6741 from 3.6675/6704.
However, the ringgit gained versus the euro to 4.7434/7468 from 4.7846/7880 a week earlier and strengthened against the British pound to 5.6764/6805 from 5.7339/7380 previously. – Bernama, January 22, 2022
