FBM KLCI set to gain from US-China trade deal


THE Malaysian equity market and currency could outperform regional peers in the near term, driven by a recovery in the trade ahead of the US-China trade signing on Jan 15 and despite tensions in the Middle East. Granted that the non-farm payrolls and the Taiwan election do not throw any curveball, the index will have a good start to the week as the global economic recovery gathers momentum again.

Oanda Corp Asia-Pacific senior market analyst Jeffrey Halley said the local benchmark has the potential to outperform regional markets in the first quarter of the year after comparatively underperforming last year.

“The positive outlook could set the FTSE Bursa Malaysia KLCI (FBM KLCI) up to a retest of 1,620 level. Markets have rebounded strongly globally for the most part as we look forward to the signing of the interim US-China trade agreement this week,” he told The Malaysian Reserve.

He said the ringgit is near a one-year high against the dollar on the expectation of stronger regional economic growth during the quarter as tensions ebb away.

“Assuming no surprises from the US over the weekend, the ringgit’s strength can continue this week with a retest of the 4.05 level entirely possible,” he added. Rakuten Trade Sdn Bhd research head Kenny Yee said the tensions in the Middle East have ebbed and the market’s focus is now elsewhere.

The second trading week of 2020 witnessed drastically lower foreign selling on Bursa Malaysia to RM28.25 million against the RM138.35 million recorded in the previous week.

Retail investors also recorded lower net sales of RM2.5 million versus the preceding week’s RM13.93 million.

The death of Iranian Major General Qassem Soleimani and heightened political risk there off led the local index to fall below the 1,600-point level.