Market expected to remain volatile

by **Cals** Sat 07 Sep 2013, 08:39

Published: Saturday September 7, 2013 MYT 12:00:00 AM
Updated: Saturday September 7, 2013 MYT 7:29:51 AM
Market expected to remain volatile

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REVIEW: In yet another volatile week for the local stock market, the benchmark FBM Kuala Lumpur Composite Index (KLCI) swung between gains and losses every alternate day, as bargain-hunting and profit-taking activities took turn to drive the market over the week.
The market in general remained under pressure amid geopolitical concerns on Syria and reversal of funds from emerging economies to developed nations.
Although the release of stronger-than-expected economic data by several major economies had somewhat lifted sentiment, they did not manage to meaningfully boost buying momentum.
Shares on Bursa Malaysia started the week on a poor note, declining 10.02 points to 1,717.56 on Monday due to weak buying momentum and cautious sentiment amid rising geopolitical concerns over a possible US-led military strike on Syria. Trading was relatively thin with only 1.08 billion shares worth RM1.2bil changing hands. In terms of market breadth, losers beat gainers 523 to 231.
Regional markets, on the other hand, did better after China said a gauge of its manufacturing sector rose to a 16-month high of 51 in August from 50.3 in the preceding month.
There were also further signs that the 17-nation euro area was recovering, as the region’s services index advanced to 51 in August from 49.8 in July, while the factory gauge indicated a second consecutive month of expansion, rising to 51.3 in August from 50.3 in the preceding month.
Most regional indices therefore advanced on Monday, with Japan’s Nikkei 225 gaining 184.06 to 13,572.92, Hong Kong’s Hang Seng Index (HSI) advancing 443.97 to 22,175.34, and Singapore’s Straits Times Index (STI) rising 26.78 to 3,055.72.
Most regional markets continued to advance the following day. The Nikkei ended 405.52 points higher at 13,978.44, as the weakening of yen against the US dollar benefited exporters. HSI advanced 219.24 to 22,934.58 but STI lost a marginal 0.94 to 3,054.78.
The positive sentiment in the region managed to lift shares on Bursa Malaysia on Tuesday, with the FBM KLCI rebounding and ended 6.65 points higher at 1,724.21. Volume improved slightly to 1.35 billion shares valued at RM1.51bil. There were 436 counters that posted gains against 274 losers.
On Wednesday, however, the Malaysian stock market returned to correction mode, with the FBM KLCI declining 7.45 points to close at 1,725.55. Trading volume was steady at 1.47 billion shares worth RM1.81bil, with 431 counters declining against 277 gainers.
Most regional markets also closed lower on Wednesday as investors were reminded of the uncertainties surrounding the possible US-led military strike on Syria. HSI eased 68.36 points to 22,326.22, while STI was down 39.36 to 3,015.42. Nikkei, however, closed slightly higher by 75.43 points at 14,053.87.
On Thursday, shares on Bursa Malaysia rebounded. The FBM KLCI advanced 4.21 points to close at 1,720.97, with gainers trumping losers 462 to 214. Trading volume remained moderate with 1.59 billion shares worth RM1.66bil changing hands.
Major regional markets also closed in the positive territory. Nikkei was higher by 10.9 points at 14,064.82, HSI was up 271.8 points at 22,597.97, while STI rose 24 points to 3,039.45.
A slew of positive economic data – from sustained improvement in the US job market to growth in services sector – boosted the US stock market.
Shares on Bursa Malaysia closed higher yesterday, as FBM KLCI gained 2.83 points to 1,723.80, tracking the slim gains of Wall Street. Trading was thin, as volume barely breached one billion shares. It seemed investors were staying at sideline and reluctant to take position ahead of the weekend.
Regional markets were mixed. HSI gained 23.25 points to 22,621.22 and STI was up 8.90 points to 3,048.35, while Nikkei lost 204.01 to close at 13,860.81 yesterday.
Outlook: Trading is expected to remain volatile in the week ahead, as foreign funds are expected to continue making their way out of emerging economies, including Malaysia.
The slew of positive economic data from the United States lends credence to concern that the US Federal Reserve could announce the tapering of its quantitative easing programme soon.
That, according to analysts, would put global markets in a selling mode.
Maybank Investment Bank Bhd, which sees support levels for FBM KLCI at 1,690 and 1,717, says it prefers a “sell on rallies” stance for the local index.
It argues that the local equity market and ringgit will likely remain weak due to reversal of foreign capital, and adds that a resistance level of 1,742 is likely to cap market gains.
According to BIMB Securities Sdn Bhd, some degree of trepidation has been detected as buying has now simmered down. It expects the immediate support level for FBM KLCI to be at 1,715.
According to RHB Investment Bank Bhd, a failure of the index to hold above the psychological level of 1,700 will mark the return of further weakness. Immediate support is tagged at 1,690 points.