Bursa’s KLCI bulls embrace boar year

Analysts reckon it to be a good sign thereon as the 1st trading day for the Year of the Boar appears to have ended on stronger footing


THE local stock market may have ended the first month of 2019 on a lacklustre note, but post-Chinese New Year (CNY) holidays are seeing the bulls gearing its way into the “Year of the Boar”.

The FTSE Bursa Malaysia KLCI (FBM KLCI) closed 9.78 points higher yesterday after a 2½ days of break in contrast to the MSCI AC Asia Pacific Index that was down 0.1%.

The benchmark index was 0.49% higher at 1,693.39 with a total of 1.34 billion shares exchanging hands for a value of RM1.17 billion.

Gainers led losers by 443 to 261, while 1,150 counters were untraded and unchanged. The move was the biggest this year since rising 0.59% on Jan 22.

MISC Bhd contributed the most to the advance and had the biggest gain, +3.9%, while Axiata Group Bhd fell 3%, the biggest loss.

Other top movers included Maxis Bhd, +2.5%; Genting Bhd (+2.2%); Hartalega Holdings Bhd (+1.5%); Press Metal Aluminium Holdings Bhd (-1.4%); DiGi.Com Bhd (-1.3%); and AMMB Holdings Bhd (-0.9%).

On the eve of CNY, which was also the first trading day for February, the FBM KLCI rose as much as 16 points in the morning trade but the upsurge was short lived, as the index closed only by a meager 0.08 point to 1,683.61 points.

FBM KLCI ended January at 1,683.53 points, down 9.35% in the last 12-month period since the 2018 CNY, short of entering market correction territory.

As the first trading day for the Year of the Boar appeared to have ended on a stronger footing, analysts reckon it to be a good sign thereon.

MIDF Amanah Investment Bank Bhd head of research Mohd Redza Abdul Rahman believes that the FBM KLCI showed a good upward swing yesterday, and that the next influencing data point would be the fourth quarter of 2018 (4Q18) results season, which is underway.

“It is a good swing, but still below the psychological 1,700 points.

“Among the resin were a more accommodative tone over the geopolitics events, particularly those concerning US President Donald Trump, as well as the appreciation of ringgit against the greenback,” he told The Malaysian Reserve (TMR).

He added that it would be interesting to see how companies fare in their 4Q18 results amid the challenging commodity prices at that point of time.

Meanwhile, Rakuten Trade Sdn Bhd VP of research Vincent Lau shared a similar stance on the local stock market’s performance.

“Indeed, this is a good sign to the Year of the Boar, post-CNY holidays and adding to this is the year-to-date net foreign inflows of over RM1 billion,” he told TMR.

Lau also believes the Year of the Boar seems to do better historically.

He emphasised that even Finance Minister Lim Guan Eng had reiterated that 2019 would be the start of economic development and a more prosperous year.

“The new government’s reforms should start to see results this year,” he said, adding that these positives will eventually offset concerns stemming from a global economic slowdown.

On the technical outlook for the FBM KLCI, Kenanga Research maintained its ‘Neutral’ stance as the index remains above the 20- and 50-day simple moving averages (SMAs), but other momentum indicators are starting to show signs of slowing down.

“A positive outcome from the trade talk will see the index trending higher to its resistances 1,730 (R1) and 1,800 (R2). Should the index break below both the 20- and 50-day SMA, support levels can be identified at 1,650 (S1) and 1,600 (S2),” it said in its research note recently.

In the meantime, Hong Leong Investment Bank Bhd (HLIB) said KLCI is likely to engage in an extended consolidation in this holiday- shortened week with key supports near 1,676 (38.2% FR) followed by 1,666 (50% FR), in the wake of longblack candlestick and weakening technical readings.

“On the flip side, a decisive breakout above 1,700 will spur index higher towards 1,705 (January, 28-high) and 1,713 (100-day SMA) resistances,” it said in its trader’s brief.

HLIB also noted that the potential trade deal between the US and China before the March deadline and dovish shift in the US Federal Reserve’s monetary stance would help risk-on sentiment on FBM KLCI to recapture the 1,700-1,750 levels over the near term.

“However, we see stiff resistance near 1,713-1,726 as we are likely to experience a tepid February reporting season,” it said.

The FBM KLCI is up 0.2% so far this year. The index is 4.1% above its 52-week low of 1,626.93 reached on Dec 18, 2018, and 11% below its 52-week high of 1,896.03 on April 20, 2018.


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