Supportive momentum likely to lift FBM KLCI in 1Q19

KUALA LUMPUR: The FTSE Bursa Malaysia KLCI (FBM KLCI) on Bursa Malaysia is expected to extend its fourth quarter 2018 (4Q18) supportive momentum into the first quarter this year, thus swinging higher to touch the 1,800point psychological resistance, said Kenanga Research.

In a note, the research firm said the upward trajectory could be achieved should the uptrend support line of 1,630 rise and the crucial 1,600-point psychological support remain intact.

“The first quarter is normally the stronger quarter in terms of market performance in contrast to the second and third quarters.

“The index is likely to trade sideways between 1,600 and 1,900 if no major negative surprise emerges,” it said.

Kenanga Research said market performance would also be supported by the potential slower pace of US interest hikes, as this expectation has prompted the US Dollar Index to weaken.

As such, foreign outflow could become more manageable going forward, it said.

“Moreover, as the ringgit is relatively cheap and traded near its two- decade lows against many Asian currencies, this makes Malaysian equity market increasingly more competitive,” it explained.

On risk, the research firm said concerns over market valuations with the recent higher net foreign funds outflow of RM3.16 billion in 4Q18 vis- à-vis RM1.71 billion in the previous quarter could weigh on the market performance.

The weaker oil price at US$ 55/ barrel for Brent Crude coupled with the uninspiring crude palm oil ( CPO) price and its weak technical outlook, could also be pull factors, it said.

“Nonetheless, we believe the local market may still remain stuck in range-bound mode until significant rerating catalysts are seen,” it added. — Benama