KUALA LUMPUR (Dec 5): FLCE Bursa Malaysia KLCI (FBM KLCI) is expected to trade between 1,640 and 1,650 next week, supplemented by window dressing activities expected to start then.
However, a knee-jerk reaction is expected on Monday, driven by a Fitch Ratings downgrade from foreign currency issuer (IDR) long-term default rating to ‘BBB +’ from ‘A-‘ with a fixed outlook.
CEO of Pacific Asset Management Sdn Bhd Datuk Dr Nazri Khan said December has been a positive month for the FBM KLCI historically; so he can see the market rise slowly before.
He said among the positive catalysts for the market moving forward were optimism over Covid-19 vaccines and the government’s 2021 Budget, better-than-expected third-quarter results, as well as continued interest in shares of companies considered to be beneficiaries anticipated economic recovery. .
“We are flushing with liquidity and more are coming. This week’s foreign inflows were almost all the better, which means we’re on the way back to normalcy, ”he told Bernama.
Economist of the Bank of Islam Malaysia Bhd, Adam Mohamed Rahim, believes the lively response to downgrading Malaysia’s sovereign rating would be temporary.
“Bond yields for the Malaysian Government Securities may decline as many investors rush into the bond market. The ringgit will also be adversely affected, but things may improve quickly thereafter, ”he said, adding that glorified political jitters could also block feelings on Bursa Malaysia.
In responses to the Fitch review, Tengku Finance Minister Datuk Seri Zafrul Tengku Abdul Aziz said his decision did not give due justice and credit to Malaysia’s crisis response efforts and strong economic fundamentals.
Fitch also expects Malaysia’s Gross Domestic Product (GDP) to shrink by 6.1% in 2020 before rebounding 6.7% in 2021 due to fundamental impacts, the revival of infrastructure projects and the continued recovery of exports of manufactured goods and commodities.
The rating agency considers that the Budget 2021 targets of a 5.4% deficit to GDP for 2021 and an average deficit of 4.5% of GDP between 2021 and 2023, are achievable.
On Friday, market sentiment recalled after Perak Menteri Besar Datuk Seri Ahmad Faizal Azumu lost a motion of confidence vote tabled against him at a state assembly sitting.
Therefore, Adam said that any further development of the vaccine would be carefully watched.
During the week, vaccine developments and oil prices have significantly influenced the performance of domestic shares.
The market reacted negatively after Pfizer Inc exceeded its Covid-19 vaccine carriage target for the year. Earlier this week, the United Kingdom authorized the Pfizer vaccine for emergency use in that country from next week.
The oil market got a boost with Brent crude hovering near US $ 50 a barrel, after the Institute of Petroleum Exporting Countries and allies agreed to ease total output cuts by less than expected as they would increase daily output 500,000. barrels in January.
From Friday to Friday, the FBM KLCI gained 14.26 points to 1,621.85 from 1,607.59 a week earlier.
On the scoreboard, the FBM Emas Index expanded 198.69 points to 11,740.72, the FBMT 100 Index climbed 172.81 points to 11,493.96, and the FBM Shariah Emas Index increased 238.26 points to 13,507.17.
The FBM 70 rose 509.16 points to 15,249.55 and the ACE FBM Index added 35.48 points to 10624.97.
Sector-wise, the Financial Services Index jumped 281.35 points to 14,517.45, the Plantation Index was 113.51 points stronger at 7,349.40, and the Industrial Products and Services Index added 11.31 points to 173.79.
The Technology Index increased 2.21 points to 67.14, the Energy Index gained 116.45 points to 919.81 and the Healthcare Index lost 43.63 points to 3,922.73.
Weekly turnover increased to 54.02 billion units worth RM31.40 billion from 45.97 billion units worth RM23.18 billion last week.
Market’s main volume rose to 34.65 billion shares valued at 25.85 billion versus 20.46 billion shares previously valued at RM17.16 billion.
Securities turnover expanded to 3.72 billion units worth RM687.85 million from 3.30 billion units worth RM586.75 million in the previous week.
ACE Market volume contracted to 15.63 billion shares valued at RM4.85 billion from 19.39 billion shares previously valued at RM5.40 billion.