Bursa's downtrend expected to continue

Share prices on Bursa Malaysia will likely continue its downtrend next
week with rising interest rates and a massive sell-off in commodities
expected to be the biggest drag on the local bourse.


Head of Retail Research, Affin Investment Bank, Dr Nazri Khan said
the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) is expected to
continue its downward correction to test the psychological 1,500 support
level.


"We believe the old bearish stories are back again with investors
worrying about the global double-dip recession and sovereign debt crisis
in the developed world," he added.


He said negative market internals suggest a deeper correction,
namely lower volume, negative breadth, weaker momentum and rising
volatility indicators.






During the week, it was reported that the Reuters Jefferies CRB index,
the global commodity benchmark, had fallen nearly five per cent,
constituting the biggest weekly fall since late 2008.


This has dampened investors sentiment in Asian markets.


Also, the local bourse was on a downtrend in line with weaknesses
in external markets, doubts over the global economic growth with the
poor US jobs data and the plunge in commodity prices.


Bank Negara on Thursday, raised the Overnight Policy Rate (OPR) by
25 basis points to 3.00 per cent with immediate effect, while the
Statutory Reserve Requirement (SRR) will be increased from 2.00 per cent
to 3.00 per cent effective May 16.


Economists said the move is intended to balance the risk of
rising inflationary pressure and expect more rate hikes later this year.


On Friday, the local bourse closed on a negative note with investors mindful of the increasing pressure on inflation.


Nazri said besides increasing interest rates, a rise in the US
dollar and weaker ringgit, may also contribute downside pressures on the
local stocks.


"As for strategy next week, we are recommending our aggressive
investors to hold short positions in index futures while conservative
investors should stick with defensive asset class (such as high yield
utilities and bonds) and increase

their cash positions," he added.



On a weekly basis, the key index decreased by 19.45 points to 1,515.5 from 1,534.95 last Friday.


The Finance Index declined 87.41 points to 13,951.75 from 14,039.16
previously. The Industrial Index decreased 73.71 points to 2,718.66
from 2,792.37 last Friday.



The Plantation Index decreased 93.61 points to 7,496.24 from
7,589.85 last Friday. The FTSE Bursa Malaysia Emas Index decreased
132.14 points to 10,443.95 from 10,576.09 previously and the FTSE Bursa
Malaysia Ace Index decreased 137.99 points to 4,249.51 from 4,387.50.


The market was closed on Monday for Labour Day.


The weekly volume decreased to 3.924 billion shares worth RM5.45
billion from 5.007 billion shares worth RM4.901 billion last week.


The main market turnover fell to 2.952 billion shares worth RM5.217
billion from 3.705 billion shares valued at RM6.139 billion from
previously.


Volume on the ACE market decreased to 727.938 million shares worth
RM183.183 million from 974.502 million shares worth RM182.796 million
last week.


Warrants fell to 234.004 million units worth RM44.087 million from
310.393 million units worth RM61.455 million previously. -- Bernama

huih!...should be careful la this time!