By BERNAMA
The key benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) is expected to trend lower next week, battered by a confluence of negative events.
Affin Hwang Investment Bank vice-president and retail research head Nazri Khan Adam Khan said rising concerns over China, global economic growth prospects, sliding commodity prices and questions over whether global central banks were willing to act as a backstop.
“The global equity rout should continue, after the local and global market stocks officially entered into bear market territory as oil prices slid to new lows and investors fled for the safety of high-rated government bonds,” he said.
Nazri said fear rippled through global markets, taking the world market more than 20% below their 2015 highs, the common definition of a bear market and compounding equities worst start to a year on record.
“Concerns over global market capital outflows and currency depreciation fuelled the sell-off at the start of January, but those concerns have snowballed into a wider reappraisal of the global economy and the ability and willingness of central banks to support markets.
“The turmoil has sharply muted expectations for when and how aggressively the US Federal Reserve will now be able to raise rates this year,” he added.
Many market watchers continued to have a wait-and-see approach, given that Prime Minister Najib Razak will present the recalibrated Budget 2016 on Jan 28, due to the further slide in the crude oil price.
It was reported that the government would announce the new estimate of the average oil price that the budget would be based on.
For the week just ended, local and regional markets were badly hit by crude oil price which fell to a 12-year low on Wednesday and before it rebounded to settle higher on Friday.
Brent crude was up 98 cents at US$30.23 per barrel, while US crude was 85 cents higher at US$30.38 per barrel.
Crude oil concerns persisted as Iran’s international oil sanctions were lifted recently, flooding the oversupplied oil markets with more crude than the world needs at the moment.
The local bourse was swinging between positive and negative before it clawed back higher on Friday, encouraged by banking stocks, which were some of the best performers, following Bank Negara Malaysia’s (BNM) move to cut statutory reserve requirements to improve liquidity in the financial system.
BNM also maintained its overnight policy rate at 3.25%. On a weekly basis, the FBM KLCI fell 3.34 points to 1,625.21 from 1,628.55
last Friday.
The FBM Emas Index fell 87.50 points to 11,331.52, the FBMT100 Index decreased 63.45 points to 11,030.15, the FBM Emas Syariah lost 133.96 points to 12,231.37, the FBM 70 declined 219.73 points to 12,687.11, and the FBM Ace slid 246.77 points to 5,968.04.
Sector-wise, the Finance Index fell 61.87 points to 13,629.51, the Plantation Index gave up 73.95 points to 7,458.8 and the Industrial Index was 11.97 points lower at 3,146.42.
Weekly turnover advanced to 11.12 billion units valued at RM9.65 billion from 9.51 billion units worth RM9.8 billion last week.
Main market volume fell to 6.59 billion shares valued at RM7.03 billion shares worth 6.22 billion shares worth RM9.04 billion.
Warrant turnover increased to 2.04 billion units worth RM385.98 million from 1.56 billion units valued at RM319.89.
The ACE market leaped to 2.47 billion shares worth RM513.82 million from 1.72 billion shares worth RM437.52 million previously.
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