Choppy trade ahead on KL bourse

Bursa Malaysia is likely to be choppy next week ahead of the August 2 deadline for US lawmakers to raise the debt ceiling, dealers said.

With the US debt standoff continuing to dominate investor psychology, the benchmark FTSE Bursa Malaysia KLCI was expected to test the crucial psychological level of 1,545 points.

"The ability to rebound above the 1,545 points level over the next few days will definitely be positive suggesting the 1,560 level as the next target and the end of the debt saga," a dealer said.

However, any breakdown below the 1,545 level would be the first warning sign that a major peak has been completed with more downside to come possibly towards the 1,530 level as the near-term target, an analyst said.

Affin Investment Bank Head of Retail Research Dr Nazri Khan said some support for the KLCI was expected, partly due to positive regional spillover, with foreign investors returning to the country.

He pointed out that latest trading statistics indicated that foreign equity trading in the local bourse had risen above 30 per cent for the first time after being depressed since 2009.

Nazri said the government's decision to add more measures to combat inflation, such as a new price-control mechanism and a new National Key Result Area to deal with rising cost of living, will be supportive for the local benchmark.

"We strongly believe domestic bank stocks would be able to weather the crisis given their limited exposure to US dollar denominated bonds and well capitalised position," Nazri told Bernama.

He said investors should avoid highly geared companies that are dependent on foreign credit and pick cash rich companies which can seize mergers, acquisitions or privatisation opportunities in the event of a market downturn.

For the week just ended, persistent selling pressure saw the FBM KLCI end 16.25 points lower at 1,548.81, from 1,565.06, previously.

The Finance Index lost 183.52 points to 14,811.13, the Industrial Index fell 40.16 points to 2,827.74 but the Plantation Index rose 38.09 points to 7,736.2.

The FBM Emas Index decreased 83.64 points to 10,682.79.

Total weekly volume increased to 5.13 billion shares, worth RM8.07 billion, from 4.9 billion shares, valued at RM9.24 billion, last week.

The Main Market turnover rose to 3.6 billion shares, worth RM7.84 billion, from 3.33 billion shares, valued at RM8.98 billion, previously.

Volume on the ACE Market was higher at 999.5 million, valued at RM277.46 million, from 1.040 billion shares, worth RM166.03 million, registered last week.

Warrants advanced to 494.04 million shares, valued at RM96.7 million, from 521.42 million units, worth RM90.73 million, recorded previously. -- Bernama