Positive shift in sentiment to lift KL shares

February 8, 2014

After posting a net loss of 113 points over the last six weeks, the FTSE Bursa Malaysia KLCI (FBM KLCI) will likely rebound

further next week, tracking more upswings in Wall Street, Europe and Asian regional indices.

Affin Investment Bank vice-president and head of retail research Dr Nazri Khan expected the bullish performance on Bursa Malaysia next week to be driven by positive US economic data, relief in the emerging market currencies and the FBM KLCI's successful break above the 1,800-point level at closing on Friday.

"The three worst beaten emerging currencies, Argentina Peso, Turkish lira and South African rand which rallied against the greenback suggest some reliable respite in progress. At the same time, we note the ringgit has also appreciated 1.1 per cent to 3.321 to lend support to stabilise Bursa next week," he told


On the fundamentals front, Nazri said three major risks stood out in the near term namely the Federal Reserve's quantitative easing tapering decision, US debt ceiling and the weakening of the ringgit on foreign funds outflow back to the US.

However, he said these risks should be cushioned by three major catalysts which are Bank Negara Malaysia's unchanged interest rate, the upgrade of Malaysia's sovereign rating following a discipline Budget 2014 and ample domestic liquidity as the central bank recently announced RM41 billion excess liquidity in the local banking system.

Nazri said Affin had reiterated its FBM KLCI target of 1,980 points by year-end, implying a 10.1 per cent upside.

"In terms of sector view, we are bullish on banks, construction and infrastructure, oil and gas, rubber gloves, technology, transport and logistics as well as utilities," he added.

For the week just-ended, the stock exchange traded for four days as it was closed on Monday for the Federal Territory Day holiday.

On a week-to-week basis, the FBM KLCI increased 4.56 points to 1,808.59 points, the Finance Index surged 158.41 points to 16,567.09 points, the Industrial Index gained 1.52 points to 3,080.01 points but the Plantation Index slipped 31.26 points to 8,397.86 points.

The FBM Emas Index added 24.16 points to 12,480.5 points, the FBMT100 Index increased 11.82 points to 12,187.68 points, the FBM Ace was 247.18 points higher at 6,151.16 points but the FBM 70 slid 60.49 points to 13,700.56 points.

Weekly turnover rose to 6.498 billion shares, worth RM8.034 billion from last Thursday's 5.253 billion shares worth RM7.658 billion.

Main market volume rose to 4.8 billion shares valued at RM7.592 billion from 4.33 billion shares worth RM7.401 billion last week.

Warrants turnover contracted to 146.98 million units worth RM14.95 million from 157.834 million units valued at RM14.741 million previously.

The ACE market volume improved to 1.526 billion shares worth RM405.707 million from 749.554 million shares worth RM231.635 million.-- Bernama