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KUALA LUMPUR – Bursa Malaysia is expected to continue to trade on a cautious tone next week due to bearish market outlook mainly from the external front, but the key index will likely stay above the psychological 1,500 level, dealers said.
Rakuten Trade Sdn Bhd vice-president of equity research Thong Pak Leng said investor sentiment is expected to remain soft in the short term weighed by external factors such as increasing market risks and volatility in global markets amid the potential interest hike by the US Federal Reserve (Fed).
“Nonetheless, we expect bargain-hunting to set in as the fundamentals of Malaysian companies are improving.
“Furthermore, we believe local equities are undervalued as compared to its regional peers, therefore offer good potential upside for investors. As such, we expect the FBM KLCI (FTSE Bursa Malaysia KLCI) to move within the 1,550-1,570 range next week,” he said.
Yesterday, Thong said the FBM KLCI closed lower due to selling pressure across the region, losing 0.9% or 14.18 points to end at 1,555.33.
“Key regional markets were lower following the broadly negative cues overnight from Wall Street, with energy and technology stocks primarily dragging markets down.
“Additionally, hawkish remarks from Fed officials made clear that US interest rates could rise as soon as March, putting an end to ultra-easy monetary conditions,” he added.
On a Friday-to-Friday basis, the FBM KLCI rose 12.22 points to end the week at 1,555.33 from 1,543.11 last week.
The ringgit is likely to trend higher next week in the range of RM4.16 to RM4.17, with the market adopting a cautious stance prior to Bank Negara Malaysia’s (BNM) economic assessment next Thursday.
Bank Islam Bhd chief economist Mohd Afzanizam Abdul Rashid said all eyes would be on BNM’s Monetary Policy Committee meeting on January 20.
“Investors might want to digest the latest economic assessment by BNM via the Monetary Policy Statement, which will be released on the same day. I suppose there will be more guidance on how the monetary policy will be administered this year,” he said.
He also added that the support level for the ringgit against the US dollar stood at RM4.1498.
The ringgit trended higher throughout the trading week just ended except for yesterday. – Bernama, January 15, 2022