Regional indices are all up, but there’s no certainty given their tendency to fluctuate wildly, says Inter-Pacific analyst

By NG MIN SHEN / Pic By TMR

The recovery on Bursa Malaysia yesterday is likely to be temporary as a major catalyst to spark a turnaround is still lacking, with trade headlines inciting no more than knee-jerk reactions, said industry experts.

The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) closed 10.64 points or 0.64% higher at 1,663.27 yesterday, ending a six-day consecutive losing streak alongside regional and global markets, on signs pointing to a positive outlook for US-China trade talks.

Investor sentiment was upbeat after Canada granted bail to Huawei Technologies Co Ltd’s CFO, while US President Donald Trump said he would consider intervening in the case if it would help China strike a deal.

US equity futures contract on the S&P 500 Index rose 0.4% — their largest climb in over a week — as at 4pm local time yesterday, while the Stoxx Europe 600 Index advanced 0.5%.

The MSCI Asia Pacific Index and the MSCI Emerging Market Index also posted their strongest gains in over a week, rising 1.5% and 1% respectively.

Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew remains cautious of the upward momentum, noting the FBM KLCI’s rise yesterday was mostly led by the surge in financial stocks, which weighed heavily on the benchmark index.

“I think any rebound at the moment is temporary. There will be positive days when local funds adjust their portfolios and buy into heavy index components that might actually move the index up. But the market tone remains bearish,” he told The Malaysian Reserve (TMR).

The energy services index also rose on overnight rebound in energy prices, underpinned by the larger than expected crude supplies drop with the American Petroleum Institute reporting a crude oil inventory draw of 10.18 million barrels for the week ended Dec 7, versus analyst estimates of a draw in crude oil inventories of 2.99 million barrels.

Pong said the recent sell-down reflects the defensive posture of the market as defensive sectors in the healthcare and real estate investment trusts were up.

“There is no major catalyst for the market, for a real rebound. Financial services may be up along with oil and gas, but there’s no telling if they’ll stay that way. Regional indices are all up, but there’s no certainty given their tendency to fluctuate wildly,” he added.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the FBM KLCI is in an “oversold position”, based on technical readings such as the relative strength index (RSI) and the stochastic indicators.

“It’s a technical rebound and to some degree, values could have emerged, enticing investors to accumulate Malaysian stocks, especially blue chips,” he told TMR.

Gainers led losers 394 to 371, while 390 counters were unchanged and 750 untraded.

Meanwhile, the ringgit rose slightly on higher global oil prices. The local note was at 4.1845 against the US dollar at the time of writing, compared to the previous day’s close of 4.1830/1860.

Oanda Corp head of trading for Asia Pacific Stephen Innes in a note to clients, said the ringgit will continue to see outflows and de-risking, while global markets and traders were bullish on lowered US-China risk sentiment and Trump’s comments on intervention.