KUALA LUMPUR, May 4 — Bursa Malaysia is expected to see lacklustre trading next week as most investors are likely to stay on the sidelines pending clarity on post general election policy.
Affin Investment Bank Vice-President/Head of Retail Research Dr Nazri Khan expected the FTSE Bursa Malaysia KLCI (FBM KLCI) to finally digest its long rally over the last six weeks and go into profit-taking mode following the resolution of the general election.
“The local benchmark index is expected to consolidate after breaching an all-time high of 1,718.44 on April 30, gaining 6.5 per cent since March 18, 2013. This will be dampened by the softer regional tone and weaker-than-expected economic data from the US and China,” he told Bernama.
Nazri said further weakness in the top five largest stocks on Bursa Malaysia namely Maybank, CIMB, Axiata, Sime Darby and Petronas Chemicals would suggest more downside bias for the index next week.
However, the strength in global bourses however should provide cushion to the local weakness, he said.
He said optimism in the US and Europe could eventually lift the local market but there could be a selldown by investors who wish to temporarily stay on the sidelines just after the general election.
“We reckon the magnitude of downside correction will correlate with the outcome of the general election.
“Our view remains unchanged, we maintain that general election market selldown due to political shock is temporary and will normalise within weeks.
“We always believe that market performance over the medium term is always dictated by fundamentals while political shocks only impact short-term market performance,” he added.
Despite election uncertainties, the local benchmark’s ability to hit new record high driven by aggressive foreign institutional buying was a testament to positive local fundamentals, said Nazri.
He said local factors such as healthy foreign reserves, ample local liquidity, banks’ strong capital base, moderating local inflation and Bank Negara Malaysia’s accommodative monetary policy are prime key attractions to pull investors.
“As for stock picks, we opt for quality blue chips that are well positioned for the new government business model.
“As such, investors with longer term investment horizon should capitalise on cyclical stocks especially within the banks, construction, oil and gas, utilities and gaming sectors as potential post general election play and investment themes,” he added.
On a Friday-to-Friday basis, the benchmark FBM KLCI ended 16.52 points lower to 1,694.77.
The Finance Index declined 81.78 points to 15,851.49, the Plantation Index fell 143.91 points to 7,963.91 and the Industrial Index eased 3.28 points to 2,836.02. The FBM Emas Index decreased 121.85 points to 11,556.97, FBMT100 was down 110.68 points to 11,405.92, the FBM Ace Index dropped 68.69 points to 3,902.12 and the FBM Mid 70 slipped 122.26 points to 12,761.38.
Weekly turnover fell to 3.235 billion shares worth RM7.97 billion from last week’s 3.79 billion shares worth RM8.22 billion.
Main market volume declined to 2.788 billion shares valued at RM7.876 billion from 3.06 billion shares valued at RM8.09 billion last week.
The ACE market volume dropped to 106.217 million shares worth RM10.309 million from 571.28 million shares worth RM102.80 million previously.
Warrants increased to 337.338 million units valued at RM66.747 million against last week’s 151.92 million shares worth RM18.72 million.
The market was closed on Wednesday for the Labour Day holiday. — Bernama