Local bourse continues uptrend for 3rd straight day, adds almost 20 points

It’s the highest level in 4 months on enthusiasm of the US-China dispute and equity rallies across regional markets


Malaysia’s stock market rose almost 20 points yesterday, the highest level in four months, fuelled by enthusiasm of the simmering dispute between the US and China and equity rallies across regional markets.

The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) closed 19.62 points or 1.15% higher at 1,726.18, levels last witnessed in October last year with RM3.27 billion worth of shares changing hands.

Gainers thumped losers 724 to 252, with 346 counters unchanged and 532 untraded throughout the trading day.

Yesterday’s rise was the third straight rise of the local bourse, adding 37.35 points or 2.2% since last Friday’s 0.23-point drop.

The local bourse took the cue from the rising US markets and optimism that the US and China would reach a truce as trade talks resume in Washington. Analysts also expect an extension will be on the card if Washington and Beijing fail to reach an agreement before the March 1 deadline when the two economic superpowers start to slap tariffs on imports.

Regional markets also closed higher with Japan’s Nikkei 225 up 128.84 points at 21,431.49 and South Korea’s Kospi rose 24.13 points at 2,229.76. Singapore’s Straits Times Index added 18.58 points higher at 3,278.38.

The main index which tracked the top 30 counters rose 2.11% this year, but any rallies would largely be dependent on corporate earnings.

CIMB Investment Bank Bhd head of Malaysia research and regional head of agribusiness research Ivy Ng said the market is expected to be volatile this year on earnings and external risks.

“We foresee earnings risk to the market and expect volatility in the first half of 2019 which will be contingent on the earnings performance of listed corporates,” she told The Malaysian Reserve (TMR).

“External factors such as the progress of the US-China trade talks, Brexit developments and monetary decisions by central banks globally will also impact the performance of the market,” she said.

She believes if these risks are avoided, the local bourse could rise higher.

“However, if the risks turn out to be more severe than anticipated, then the market could be due for further downside,” she said.

“On the corporate side, we should get a clearer picture of how the listed companies will perform by the end of this month. Currently, our year-end 2019 FBM KLCI target is 1,638,” she said.

Top gainers yesterday comprised index-linked counters Nestlé (M) Bhd, Fraser & Neave Holdings Bhd (F&N), British American Tobacco (M) Bhd (BAT), Carlsberg Brewery Malaysia Bhd and PPB Group Bhd.

Strong fiscal showings from these companies and other heavyweights are expected to bolster the local equity market, at least in the near term.

Oanda Corp senior market analyst Jeffrey Halley said regional markets will follow Wall Street’s lead and trade in the green, but downside risks remain — especially the US-China trade war threats and the actions of the US Federal Reserve (Fed).

“Bullish sentiment will be tempered, however, by progress (or lack thereof) in the US-China trade talks and ahead of the release of the Federal Open Market Committee Minutes this morning,” he said in a research note yesterday.

He said regional currencies are also set for gains following the overnight yuan rally and weaker dollar direction.

“The US dollar seems to have slowed down for now after an excellent run that may set markets for a period of profit-taking and stronger G-10 (Group of 10) currencies,” he said.

“This could be temporary, however, as the US economy continues to fire on all cylinders for now.”

He said it is difficult to bet against the US dollar in the long term for 2019 as the country retains partly normalised yields compared to many of its global peers, while showing no signs of heading into a recession.

The ringgit continues to hold firm against the US dollar as positive economic indicators bode well for its long-term prospects.

The local note traded in the green against the greenback yesterday between RM4.0655 and RM4.0728 on a weakening US dollar and stronger crude oil prices. It already rose to a six-month high to close at RM4.0685 due to the fragile dollar and higher oil prices. Year-to-date, the local unit had strengthened 1.57%, according to Bloomberg data.

TMR reported earlier this week that Malaysia’s GDP growth of 4.7% last year underscores the resilience of its economic fundamentals which are expected to mitigate external risks.

The risks include US-China trade tensions, global growth concerns and the Fed’s monetary policy outlook.

Malaysia’s improving foreign direct investments and current account surplus are also perceived as supportive of the ringgit, the business daily reported.