Have we seen the bottom of the local stock market?


FOREIGN investors are expected to return to the country’s local equity market, following a string of positive indicators which were markedly absent in the first quarter and had dragged the stock market to its worst level.

Analysts said Malaysia’s previously “boring” stock market is turning corners and could turn bullish and test the 1,700-point level.

Rakuten Trade Sdn Bhd VP of research Vincent Lau said 1,700 points is achievable in the near term, amid the US Federal Reserve’s upcoming meeting to decide on interest rates and the start of the quarterly earnings season.

“A slew of positive news will provide our equity market the much needed boost,” he said to The Malaysian Reserve.

Lau, however, highlighted that there are concerns about global growth, the Federal Open Market Committee meeting and disappointments over the European Central Bank’s (ECB) decision.

The benchmark FTSE Bursa Malaysia KLCI declined for the third week last week, falling 0.6% in a week to 1,669.45 points last Friday. It had dropped further to 1,642.69 on Monday.

Asian markets were similarly in the red on the overnight news that the ECB is keeping its policy rate at -0.4% — although it signalled that it is ready to make cuts in September, as well as restart its bond-buying programme.

Despite trading in the red last week, foreign funds entered the local market last Monday to Thursday, registering a foreign net inflow of RM56.9 million compared to the previous week’s total foreign net outflow of RM6.9 million.

According to MIDF Investment Bank Bhd, last Thursday saw the highest daily foreign net inflow of RM58.3 million during the week.

This month alone, the index fell about 1.4%, bringing in a total decline of 6.85% in the past 52 weeks. The MSCI AC Asia Pacific Index lost around 5.21% during the same period.

Blue chips are expected to be rangebound in the coming weeks, but Lau expects that the ongoing results season in the US will provide leads.