by SHAZNI ONG/ pic by MUHD AMIN NAHARUL
MALAYSIA’S stock market is expected to be flattish this week as investors stay on the wait-and-see path, amid a lack of major catalysts.
The FTSE Bursa Malaysia KLCI (FBM KLCI) is down 7.13% for the year-to-date, continuing its run as one of the world’s worst-performing major stock gauges while heading for its worst year in a decade.
It’s likely to be “fairly flat” this week as market participants await the outcome of the US Federal Open Market Committee’s meeting on Wednesday, where the Fed is expected to announce a third straight rate cut for the year, Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said.
“The consensus is for a rate cut. If that happens, it could support and rejuvenate market sentiment. Central banks are actively intervening to spur economic activities.
“Despite that, foreign funds seem to be more receptive to Malaysian equities, judging from the net inflows in the past two weeks. That could tell us that there’s value emerging in our markets,” he told The Malaysian Reserve.
The majority of South-East Asian stock markets traded in the red last Friday, as uncertainty over the US-China trade was revived ahead of fresh rounds of negotiations, while concerns on global economic growth continued to rattle confidence.
Investors were also cautious ahead of a US-China meeting at a summit in Chile, which ended positively as both parties struck a “phase one” deal to end the trade war.
External factors have been wobbly, especially in relation to the US-China trade tensions and Brexit, Mohd Afzanizam added, with the latter in particular unlikely to be resolved anytime soon.
Under the recently tabled Budget 2020, the higher development expenditure allocation of RM56 billion should benefit the construction sector.
Meanwhile, the lack of a special dividend from Petroliam Nasional Bhd would mean more capital expenditure from the national oil company, which should benefit the oil and gas sector, Mohd Afzanizam added.
The benchmark FBM KLCI closed 0.07% or 1.11 points lower at 1,570 points last Friday. Total market capitalisation of securities listed on the local bourse stood at RM1.68 trillion according to Bursa Malaysia data, while the index was little changed for the week.
Having fallen 0.9% this month and over 7% for the year, the index is heading for its worst year in at least 10 years, as per Bloomberg data.
In the past 52 weeks, it declined 6.91%, while the MSCI AC Asia Pacific Index gained 9.65%.