Bursa to trade in cautious mode, ringgit to pursue defensive posture

KUALA LUMPUR – Bursa Malaysia is expected to trade in cautious mode on downside bias next week, with the benchmark index hovering within a range of 1,600 to 1,625, while awaiting the United States Federal Reserve meeting outcome for market direction, analysts said.

Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said investors will closely watch the Fed’s meeting on March 16 and 17, as it faces a tricky task of revving up the US economy without overheating the engine.

Axi chief global market strategist Stephen Innes said the local bourse barometer index will remain pressured on concerns due to US higher yields that will hurt longer term growth stocks.

For the week just ended, the local bourse traded higher for the first three days in extending last Friday’s rebound, but succumbed to profit-taking for the last two days of trading.

It took the cue from the positive sentiment brought about by surging crude oil prices and continues buying interest in financial stocks, while the ongoing selling pressure in the healthcare and technology sectors has mildly weakened sentiment.

On a Friday-to-Friday basis, the benchmark FBM KLCI rose 15.57 points to 1,615.69 from last week’s 1,600.12.

Turnover declined to 48.11 billion units worth RM30.34 billion from 51.97 billion units worth RM29.22 billion in the previous week.

Main market volume expanded to 34.91 billion shares, valued at RM26.72 billion versus 32.32 billion shares valued at RM24.22 billion last week.

Warrants turnover rose to 2.50 billion units worth RM423.31 million against 2.41 billion units worth RM415.24 million previously.

Meanwhile, the ringgit is expected to trade sideways next week, tracking the performance of other emerging market currencies on the expectation of rising US yields.

Innes said the market is expecting the committee to recalibrate its growth expectations higher in light of the US$1.9 trillion (RM7.8 trillion) stimulus package that will likely continue to keep upward pressure on US yields.

“This will be unfavourable for the ringgit, which I expect to continue taking a defensive posture. Hence, I would suggest a range of 4.11 to 4.13 level against the US dollar next week.”

On a Friday-to-Friday basis, the ringgit fell further against the greenback to 4.1160/1200 versus 4.0720/0760 a week earlier.

The local note also traded easier against other major currencies. – Bernama, March 13, 2021