Bursa rally fed by global growth, liquidity sees new high at 1,832 points


Strong liquidity, improved earnings outlook, global growth prospects and hawkish central bank positions are driving the rally on Bursa Malaysia as fresh liquidity saw traded volumes hit a new high of 6.96 billion shares yesterday.

Investors exchanged some RM4.59 billion worth of shares as the benchmark index, the 30-stock index, FTSE Bursa Malaysia KLCI (FBM KLCI), closed 14 points higher at 1,832 points yesterday — its highest level since mid-2015.

The tone of the market was bullish with 853 counters up, 312 counters down and the rest untraded or unchanged.

Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew said interest on Bursa Malaysia and regional markets have been gathering pace ahead of strong global economic print and investors’ focus on emerging markets.

“The catalysts driving the growth are the strong liquidity across markets globally and market players content to continue buying as there is no sign of an economic slowdown or recession,” Pong told The Malaysian Reserve.

“Central banks in most economies are also pumping in money and providing stimulus for the global economy.”

He said this is resulting in more funds flowing into markets across the globe, with the trend expected to continue throughout 2018 and the FBM KLCI rally to continue over the next two to three months.

Money flow is also into the debt market with a total of RM15.2 billion in government bonds traded last week, up from the RM4.51 billion traded in the previous week, according to MIDF Amanah Investment Bank Bhd research note.

It added trading value for corporate bonds increased to RM1.64 billion last week from the RM962 million noted in the previous week.

Higher oil prices have seen investors flocking to sector counters like Sapura Energy Bhd and UMW Oil & Gas Corp Bhd as crude oil rose above US$68 per barrel last week on price favourable news.

“Rising oil prices bode well for the FBM KLCI given that oil and gas constituents play a vital role in the local bourse’s make-up which is providing some decent inflow,” Oanda Corp head of trading for Asia Pacific Stephen Innes said.

“But this is not merely an oil-related rally as the stronger global growth narrative is benefitting exporters also.”

Pong cautioned there remains the possibility of markets falling or taking a sharp dip even in the absence of a recession.

“Similar to what happened during the 1987 world economic crisis, there could be fractures in the market and profit-taking that snowball out of control,” he said.

A chartist at a local brokerage said the benchmark index looks set to test higher at 1,830 points and breaking that could test 1,850 points, but warned the key index was overbought for the short term and at risk of a pullback correction.