Bursa Malaysia Stock Market May Come Under Pressure

Riding on the strength of an overwhelmingly bullish Wall Street the previous Friday, Asian markets shrugged off geopolitical tensions in the Korean Peninsula and steadied on renewed buying momentum at the start of the week.

South Korea led way in the region, with the Kospi Index spiking a hefty 1.4% while the Japanese market was shut for a public holiday.
In an unprecedented move, Bursa Malaysia had a muted response, with the FTSE Bursa Malaysia KL Composite Index (FBM KLCI) dropping 3.4 points to 1,782.93.

Though the market made several attemps to climb higher during the day, it was not successful, as profit-taking selling in the quality issues was a drag.

At the final bell, the key index eased 2.67 points to 1,783.66 on Monday. The next day on Wall Street, the Dow had a record finish for the fifth consecutive session while the S&P set an all-time high for the second day in a row, led by banking shares.

But oil prices were barely changed amid worries about a built up in crude stockpiles.

In the region, with the exception of Japanese equities, which rallied nearly 2% on resumption of business after the long weekend, most markets slipped as investors moved to the sidelines ahead of a two-day US Federal Open Market Committee meeting.

On the domestic front, the local bourse mirrored the Asian peers and slide deeper into the negative zones on lack of support from investors.

Meanwhile, a weaker ringgit against the greenback weighed on the local sentiment.

As usual, blue chips topped the losers board on foreign selling. Elsewhere, most second and lower liners also struggled, with retail players heading to the sidelines.

In lacklustre trade, the FBM KLCI slide from an intra-day peak of 1,783.68 in early business to a low of 1,775.30 in late session before trimming losses slightly to close down seven points at 1,776.66 on Tuesday.

Thereafter, the bulls on Wall Street continued to set a series of records, boosted by a rally in financial stocks but in Asia, shares turned mixed to marginally lower in cautious mood as investors awaited signals from the US Federal Reserve policy meting on when it will hike rates again and start shrinking its balance sheet.

Pending a clearer picture to emerge, the local bourse stayed in correction mode due to limited support from the big boys while the retail investors remained on the sidelines.

In subdued session, the key index tested the downside of 1,770 points in late trade before bouncing off slightly to end 3.08 points lower at 1,773.58 on Wednesday.

As expected, the Fed left interest rates unchanged after a two-day meeting and although the Dow sustained rally into the uncharted territory and most regional markets firmed Bursa Malaysia extended the consolidation process, as jittery investors fret about the possibility of one more US interest rate hike by the end of the year and the withdrawal of about US$4.2 trillion in holdings of US Treasury bonds and mortgage-backed securities.

Petronas Gas and British American Tobacco topped declines, dragging the FBM KLCI down 2.54 points to 1,771.04 in another lacklustre session on Thursday.

Bursa Malaysia was shut for a public holiday yesterday.

Statistics: Week-on-week, the bellwether FBM KLCI skidded 15.29 points, or 0.9%, to 1,771.04 on Thursday, versus 1,786.33 on Sept 15. Turnover for the four-day holiday-curtailed week amounted to 10.402 billion units valued at RM8.329bil, compared with 13.126 billion shares worth RM10.766bil done during the previous regular week.

Outlook: Bursa Malaysia was in a correction mode the past week, with the FBM KLCI pulling further away from the recent three-month peak, as a futile attempt to penetrate the 1,800-point psychological barrier a week ago prompted investors to take some money off the table.

The more-hawkish-than-expected tone from Janet Yellen at the latest policy meeting and the plans to begin the unwinding of a decade of aggressive monetary stimulus added to the downbeat mood.

While a rate hike in the US is negative for risky assets, the Fed’s tightening plan may lead to capital outflows from the region and Malaysia may not be spared.

Combined with the latest move from US President Donald Trump ordering new sanctions on North Korea, tensions in the Korean Peninsula is likely to ratchet up and put more investors on the defensive mode.

In the absence of buying incentives on the horizon, the local bourse will probably extend the correction phase this week.

Based on the daily chart, the key index was only maintaining a slim three-point margin above the nine-month-old ascending trendline, resting approximately at 1,768 points. A breakdown from this trendline, if it happens, may see the FBM KLCI falling towards the 1,750-point floor on persistent liquidation.

Technically, indicators are looking very good too. While the weekly moving average convergence/divergence (MACD) histogram resumed the downward expansion against the weekly trigger line to retain the bearish signal, the daily MACD issued a sell call during intra-week trading, implying the local bourse is expected to be under pressure until a fresh bout of buying interest emerges.

Read more at http://www.thestar.com.my/business/business-news/2017/09/23/bursa-may-come-under-pressure/#JvJs9oWy8Ejh8qB0.99