KUALA LUMPUR – Bursa Malaysia is expected to witness cautious trading next week amid a lack of major catalysts to influence investors’ risk appetite.
Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng reckoned that the local market will see some headwinds next week amid the heightening regional volatility.
“Nonetheless, we believe accumulation of stocks will persist on dips,” he told Bernama.
Meanwhile, Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid opined that the index is having difficulties trying to break the 1,600-point psychological level.
“I think the similar dynamics would continue next week as investors would continue to be more anxious as the Fed’s May 3 and 4 Federal Open Market Committee meeting draws nearer.
“In short, there’s not much positive vibes at the moment. Perhaps, fund managers would prefer to hold more cash at this juncture given the lingering uncertainties,” he added.
For the week just ended, Afzanizam said foreign fund flows had recorded some net sales in the local bourse on April 13 and 14, whereby net sales of RM22.29 million and RM41.83 million were reported.
On a Friday-to-Friday basis, the FBM KLCI slipped 18.28 points to end the week at 1,589.01 from 1,607.29 in the previous week.
On the index board, the FBMT100 Index decreased 139.28 points to 11,061.34, the FBM Emas Shariah Index dropped 155.02 points to 12,047.57, and the FBM Emas Index slid 137.89 points to 11,413.70.
Meanwhile, the FBM ACE contracted 74.98 points to 5,786.50 and the FBM 70 lost 222.50 points to 13,781.35.
Sector-wise, the Plantation Index erased 1.67 points to 8,355.27, the Industrial Products and Services Index was unchanged at 214.47, and the Energy Index dipped 6.27 points to 751.27.
The Financial Services Index dropped 146.33 points to 16,636.0, the Healthcare Index shed 77.76 points to 2,087.45, and the Technology Index trimmed 4.19 points to 72.44.
Weekly turnover grew to 17.33 billion units valued at RM10.46 billion from 16.94 billion units valued at RM11.29 billion last week.
The Main Market volume decreased to 11.55 billion shares worth RM9.33 billion versus 11.73 billion shares worth RM10 billion in the previous week.
Warrants volume fell marginally to 1.46 billion units valued at RM236.16 million against 1.61 billion units valued at RM257.69 million previously.
The ACE Market volume advanced to 4.30 billion shares worth RM889.94 million from 3.58 billion shares worth RM1.03 billion the week before.
Meanwhile, the ringgit is anticipated to trade on a downward trend next week on lack of catalysts, analysts said.
Afzanizam said buying support for the US dollar was likely to strengthen as the US Federal Reserve was aggressive in the interest rate increase cycle and could raise 50 basis points at one go in the upcoming meeting on May 3-4.
Meanwhile, China’s fixation with the zero-Covid-19 strategy is taking a toll on the supply chain which could create further delays in the production of finished goods as well as lower productivity globally.
Moreover, he said, the ongoing military conflict in Ukraine would exert pressures on commodity prices and hence inflation.
“So, there are multiple factors that seem to negatively affect the economic recovery momentum.
“The International Monetary Fund will release its World Economic Outlook next week and the indication so far is they will downgrade the global growth projections for 2022 and 2023.
“All in all, the ringgit should stay weak and remain in a narrow range (versus the US dollar). It will continue to linger around the RM4.23 level,” he said.
According to him, further depreciation would be somewhat limited given that the ringgit is already at an oversold position based on the technical view.
“Next week, the Consumer Price Index for March would be out. We believe the figure might be higher than the 2.2% recorded in February.
“We shall see what Bank Negara Malaysia’s latest assessment will be when officials meet for the Monetary Policy Meeting on May 10-11,” said Afzanizam.
Meanwhile, SPI Asset Management managing partner Stephen Innes echoed the same sentiment for the ringgit as global growth concerns may overtake inflation worries and markets veer back on the recession procession.
“I think the ringgit could likely move between 4.2250 and 4.2450 next week, but we continue to keep an eye on China’s policy easing that should contain the current run of the ringgit’s weakness,” Innes said.
On a weekly basis, the ringgit was lower against the greenback at 4.2330/2380 on Friday compared to 4.2195/2230 a week earlier.
Meanwhile, the local unit traded mostly mixed against a basket of major currencies on a Friday-to-Friday basis.
The ringgit dropped against the Singapore dollar to 3.1198/1242 from 3.0953/0981 a week earlier but rose vis-à-vis the Japanese yen to 3.3465/3510 from 3.4004/4034.
The local currency weakened against the British pound to 5.5308/5374 from 5.5026/5072 last week but improved versus the euro to 4.5776/5830 from 4.5858/5896 previously. – Bernama, April 16, 2022
