FBMKLCI likely to continue downtrend

The FBMKLCI is expected to continue its downtrend next week due to a rising solvency risk and borrowing cost in Europe amid persistent worries on the global economy growth.

Vice-President, Head of Retail Research, Affin Investment Bank, Dr Nazri Khan, said despite positive news from US on a possible monetary stimulus package, a weaker than expected read on April Euro zone sentiment and rising European bond yield seemed to bring struggling European growth and debt concerns back into focus.

"Several important international market moving data are expected to add more volatility and cautiousness this week including US unemployment rate and China manufacturing data," he said.

Back home, he said the local bourse saw negative reversal action to suggest more profit taking and deeper correction in the seasonally bearish month of May.

"We currently see weak buying momentum and serious technical damage with FBMKLCI breaking below the crucial 1,580 support level on negative breadth on weaker average volume of 1.4 billion shares.

"We also believe serious price weakness and underperformance in FBMKLCI heavyweights such as Maybank, Sime, Armada, YTL and MMC to drag the local benchmark lower this week," he added.

Nazri said the local bourse should be at a healthy correction between 1,560 and 1,550 level to neutralise the past seven months rally since September 2011.

"Hence, we expect downside momentum to bring FBMKLCI price to the next support level namely March 2012 low near 1,560 and possibly February low of 1,550.

On a Friday-to-Friday basis, the FBM KLCI lost 24.05 points to 1,567.80 from 1,591.85 last Friday.

The Finance Index fell 243.99 points to 13,985.06 from 14,229.05 last week.

The Industrial Index eased 38.03 points to 2,824.87 from 2,862.90 previously.

The Plantation Index declined 150.25 points to 8,647.78 from 8,798.03 last Friday, while the FBM Emas Index declined 156.41 points to 10,762.81 from 10,919.22 and the FBM Ace Index 83.38 points to 4,535.33 from 4,618.71.

The FBM Mid 70 Index eased 120.77 points to 11,875.04 from 11,995.74 while the FBMT100 Index 151.31 points to 10,565.52 from 10,716.83 last Friday.

Total weekly volume decreased to 7.309 billion shares valued at RM7.520 billion from 8.602 billion shares, valued at RM7.534 billion last week.

Main Market turnover dwindled to 4.006 billion shares valued at RM6.87 billion from 4.388 billion shares valued at RM6.789 billion last week.

Volume on the ACE market fell to 2.743 billion shares worth RM511.128 million from 3.468 billion shares worth RM618.986 million and warrants eased to 493.851 million units worth RM107.724 million from 582.032 million units worth RM117.978 million last week.

The market will be trading for four days next week as on Tuesday, May 1st, the market will be closed for Labour Day celebration. -- Bernama