No clear direction ahead
REVIEW: The week’s trading on Bursa Malaysia saw investors coming in hot towards the latter parts of the trading days to reverse fortunes. The four-day trading week bore witness to late-hour pushes into positive territory as well as a stone’s drop into the red.
Anticipation had been building towards Thursday when Sime Darby would resume trading after a three-day suspension, and its two spinoff entities, Sime Darby Plantations and Sime Darby Property, would make their debuts on the market.
At the week’s open on Monday, Asian markets saw red as China continued to pull back after assets management reforms. But it was the global tech sector that reeled from a shocker in the form of a Morgan Stanley report that the “super-cycle” in chip demand may be coming to an end.
Short of positive catalysts, the FBM KLCI was trading below break-even point when a spike in interest in the final hour of trade saw the index rise nearly four points and end 2.63 points higher at 1,719.86.
Foreign investors seemed to have returned to Bursa and would turn net buyers for the week. Institutional investors were net sellers of local equity, with also a negative result from retail.
On Tuesday, US markets were mixed ahead of a Senate vote over a proposed corporate tax cut while Chinese equities continued to face selling pressure in the earlier part of the trading day.
Some uncertainty had also begun to take root in the oil markets as the Opec meeting loomed and investors became jittery over whether members of Opec and non-member Russia would agree to a deal. US oil production was also on the recovery as the Keystone pipeline in Canada restarted, albeit not at full capacity.
The FBM KLCI continued to see selling pressure, falling over nine points in the first hour of trade but shaving losses as the day progressed. It ended 5.44 points lower at 1,714.42, the lowest point for the week.
At mid-week, the local bourse was given a jab of renewed optimism, precipitated by a strong performance in US markets, owing to the Senate’s progress in coming to a tax deal.
There was also news of a North Korean missile test, but Asian markets seemed unfazed by this latest hostility.
At market close, the index was up 5.96 points to 1,720.38 points. Tenaga Nasional rose 42 sen to RM15.40, putting on 3.9272 points to the index.
Investor anticipation over Thursday’s market highlight gleaned disappointment when both Sime Darby spin-offs took a fall upon listing.
The much-vaunted plantations stock plummeted 58 sen to RM5.01 while the property play dropped 30 sen to RM1.20. Sime Darby, however, rose 31 sen to RM2.35 with a high volume of 124.72 million shares done.
The two lagging Sime counters shaved a combined 10.191 points off the index.
The FBM KLCI managed to stay above water for much of the trading day, buoyed by strong earnings results. But the poor performance of the Sime counters combined with falls from Public Bank, Genting and Hong Leong Bank, saw a 10-point dive in the final minutes of trade, seeing a dip of 2.52 points to 1,717.86.
Bursa announced later that evening that Sime Darby Property and Westports Holdings would be deleted from the FBM KLCI on Dec 6 and added to the FBM Mid 70 Index, keeping the former index to a 30-stock listing.
To cap off the agenda for the day, the Opec meeting yielded an agreement that production cuts would extend until the end of 2018, but there would be a review in June.
The deal was well received and crude oil prices remained firm with slight advances.
Statistics: For the week, the major index was little changed, up 0.63 of a point, or 0.03% to 1,717.86 points on Thursday, versus 1,717.23 on Nov 24.
Total turnover for the trading week stood at 7.87 billion shares amounting to RM12.7bil, compared with 10.41 billion units valued at RM11.52bil exchanging hands the prior week.
Outlook: There were few new positive cataysts on the local market this past week although the continued gains in the ringgit over the US dollar, boosted by positive analyst forecasts, may have helped bring foreign investors back into local equity.
The Opec meeting helped to cement expectations of firm oil prices moving forward. Based on the daily price chart, oil prices are expected to trade in range.
The slight week-on-week gain on the index is a mildly positive result, but the weakness was obvious from the persistent negative breadth of the market. Further to that, the 11th-hour reversals in index performance during the week indicated that the market had no clear direction as to trajectory.
Such developments may result in more investors adopting a cautious approach as they wait for the market to stabilise.
The FBM KLCI remained under pressure by the formation of negative crossings on the daily price chart. Reaching a week’s high of 1,727.62 points on Thursday, the index could not rise above the resistance set at 1,730.
Support for the index remains at the 1,700 mark, with lower support pegged at 1,680.