Bursa to continue facing lacklustre trading mood in 3Q
KUCHING: Bursa Malaysia Bhd (Bursa) has been projected to continue facing a lacklustre trading mood this third quarter of 2018 (3Q18) after a muted 2Q18 performance.
The research arm of Kenanga Investment Bank Bhd (Kenanga Research) strategist’s seasonal study that suggested a muted 2Q of the current year (2Q18) had been proven correct alongside Securities Average Daily Trading Value (SADV) that inched up by only one per cent quarter on quarter (q-o-q) and four per cent year on year (yo-y) to RM2.7 billion.
“In the forthcoming 3Q18, our strategist expect the lacklustre trading mood to continue as some investors may stay side-lined while waiting for the release of the new Government’s 100-day progress report or its First Budget.
“In fact, 3Q18 started with a soft note; with SADVs hovering at RM2.1 billion as well as daily trading volume of only 2.47 billion shares, from beginning of July 2018 till our date of writing,” Kenanga Research said.
As for AmInvestment Bank Bhd (AmInvestment Bank), in the near term, trading in the securities market will likely remain volatile with the US Fed turning hawkish, leading to potentially further interest rate increases coupled with noises surrounding the international trade tensions.
“Outflows of foreign funds from the emerging markets still persist albeit at a slower pace,” it said.
AmInvestment Bank expected the market sentiment towards the emerging market to turn more positive once the US rate hike cycle tapers off and that the valuations in the emerging market becomes attractive after the selldown of equities.
“Meanwhile, the institutional reforms to be taken domestically by the new administration are expected to have a positive impact on the investor sentiment in the longer run.”
Kenanga Research noted that on the mid-to-long-term outlook, as part of the continuing initiatives to further enhance the vibrancy and liquidity in the equity market, a list of measures including liberalisations and incentives to supercharge the vibrancy of capital market has been introduced to date.
“We are long-term ‘positive’ on the initiatives as all these would enhance the vibrancy and liquidity of the local market, especially retail participation, which would in turn enhance Bursa’s trading revenue,” the research arm said.
For financial year 2019 (FY19), the research arm of MIDF Amanah Investment Bank Bhd ( MIDF Research) believed the market environment should encourage more trading activities, provided that more clarity is available, in terms of major economic direction by the new government.
“However, we believe that this have been factored in by investors,” MIDF Research said.
“In addition, there is a possible downside risk stemming from external sector namely the USChina trade spat.”