KL bourse set to rebound next week

Share prices on Bursa Malaysia are likely to rebound next week on mild bargain hunting in the emerging markets amid rising concerns over slower global economic growth.

Affin Investment Bank head of retail research, Dr Nazri Khan, said despite the low-volume-soft-session last week, the bank, however, saw signs of cautious buying next week due to the slowdown in the US economic recovery.

"We expect oversold bounce to continue next week back to a higher range of 1,560-1,570 level given the temporary bargain hunting in the emerging markets following the battering of stocks in the majority of the developed world," he told Bernama today.

He said as long as the soft patch did not evolve into panic selling, the bank would maintain its core view that any dip was a buying opportunity as recovery was steady but slow.

"The fact that Dow Jones closed below 12,000 for the seventh week free-fall (the longest slide since September 30, 2002) may suggest a short term undervalued market following a serious oversold situation although we agree that we don't see any selling climax yet to suggest a real medium term bottom," he
said.

Apart from that, the Volatility Index, the barometer of investors' anxiety, which jumped to its highest level in three months and Advisor Sentiment Index, which fell to a six-month low (with a whopping 48 per cent investment advisers bearish over the next six months) may be another two indicators confirming buying opportunities in an oversold broad market, he said.

Nazri said the several initial public offerings recently, including MSM Holding and Bumi Armada on the local market, as well as RenRen, LinkedIn and Facebook in the global market, suggested that sentiment was still perceived by professionals as favourable for equities.

The market is expected to be affected by Greece's unresolved debt with most economists anticipating the European Union and the International Monetary Fund to release a minimum ?10 billion loan tranche to help Athens.

Besides that, the expiration of quantitative easing 2 (QE2) by end-June will also be the next biggest catalyst to sway the market in near term with most economists believe the Federal Reserves (Fed) done with QE2 and has no plans for QE3 on the horizon, he said.

Apart from that, seven high-impact external data are expected to be released next week namely, US Federal Funds Rate, US Fed statement, US unemployment claims, US home sales, German IFO business climate, Euro ZEW Economic Sentiment and US crude oil inventories.

Domestic-wise, local investors would be supported by the latest Economic Transformation Programme initiatives announced recently as well as anticipation on possible free trade agreements with the Middle East, South Asia and the Americas.

For the week just-ended, the benchmark FBM KLCI was traded range-bound before closing the week higher on buying support from selected heavyweights like Maybank and Petronas Gas.

The benchmark FBM KLCI closed the week 7.24 points firmer at 1,563.43.

The Finance Index surged 119.12 points to 14,747.07, Industrial Index increased 13.32 points to 2,773.78 and the Plantation Index rose 31.2 points to 7,887.69.

The FBM Emas Index increased 25.84 points to 10,739.46 while the FBM Ace Index slipped 12.24 points to 4,243.83.

Weekly volume increased to 4.121 billion shares worth RM7.805 billion from 3.674 billion shares worth RM6.608 billion last week.

The main market turnover declined to 2.957 billion units worth RM7.585 billion from 2.606 billion units worth RM6.433 billion last week.

Volume on the ACE market improved to 869.109 million shares valued at RM169.258 million from 790.91 million units valued at RM117.53 million previously.

Warrants declined to 232.483 million shares worth RM33.842 million from 266.08 million shares worth RM52.354 million last Friday. -- Bernama