KUALA LUMPUR – Trading on Bursa Malaysia is expected to be cautious ahead of Bank Negara Malaysia’s (BNM) overnight policy rate (OPR) announcement on Wednesday.
Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said the possibility of another rate cut cannot be ruled out, given the highly fluid situation arising from the resurgence of Covid-19 cases and reimposition of the movement control order (MCO).
“Any further cut in the OPR will likely cause prices of banking stocks to drop, which will subsequently drag the local bourse, as banking stocks make up a heavy weightage in the FTSE Bursa Malaysia KLCI (FBM KLCI).
“Taking this into consideration, the FBM KLCI is expected to trade within a range of 1,620 to 1,640 next week,” he told Bernama.
BNM will hold its first monetary policy committee meeting of the year on Friday.
At present, the OPR stands at its lowest level of 1.75% after four cuts, resulting in a 125-basis-point reduction in 2020.
Overall, market sentiment is mostly centred on the nationwide emergency, MCO in some states, US stimulus package, and US-China trade war.
Yang di-Pertuan Agong Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah on Tuesday declared a state of emergency to be in force until August 1, aimed at containing Covid-19.
Prime Minister Tan Sri Muhyiddin Yassin has assured that business activities will proceed as usual despite the proclamation.
On Thursday, US president-elect Joe Biden announced a US$1.9 trillion (RM7.6 trillion) pandemic support proposal in a bid to stem Covid-19 cases and stabilise the economy.
The global market, meanwhile, was rattled after President Donald Trump’s administration blacklisted Chinese companies including Xiaomi, which has been added to a list of firms alleged to have links to the Chinese military.
On a Friday-to-Friday basis, the FBM KLCI slipped 6.18 points to 1,627.01 from last week’s 1,633.19. – Bernama, January 16, 2021
