FBM KLCI surges past 1,800 points
FBM KLCI breaks through 1,800 points on return of foreign funds
PETALING JAYA: Malaysian equities had another solid close yesterday, with the benchmark index breaking past the crucial 1,800point level, in a sign of growing confidence in the country’s capital market.
Rising for the second consecutive day, the FBM KLCI gained 13.64 points, or 0.76%, to close at an 11-week high of 1,804.73. Volume was moderate, with 2.77 billion units worth RM2.71bil changing hands.
There were 590 gainers, 322 losers and 411 counters unchanged.
Year-to-date, the index was up 0.44%.
A broker told StarBiz that the gradual return of foreign funds to the Malaysian equity market had played a role in lifting the local bourse. In addition, he noted, investors’ mood had turned somewhat upbeat on corporate earnings growth in the United States and China’s pledge to keep its economy stable, despite the ongoing trade tensions between the world’s two largest economies.
“We see a trend of foreign funds gradually making a comeback to the market, so this helps,” the broker said.
“Overall, the sentiment is quite positive because we have strong corporate earnings coming out of the US, and China pledging to take targeted measures to support its economy, which has started to feel the impact of the trade war,” he added.
Foreign flow to Bursa Malaysia has turned positive since last week after 13 uninterrupted weeks of selling by foreign funds. Cumulative foreign net purchases were estimated at RM625mil between July 31 and Aug 7.
Meanwhile, an analyst said post-election worries, after Pakatan Harapan swept into power on May 9, had started to dissipate, as the 100-day mark of the new govern- ment’s rule approaches.
“The new government will reach its 100-day milestone on Aug 17; investors will expect more stability coming from the fledgling administration as well as greater clarity on its policy direction,” the analyst with a local investment bank noted.
Yesterday the sales and service tax (SST) was passed to replace the goods and services tax (GST). The SST will come into effect on Sept 1 following the zerorisation of the GST on June 1.
Separately, Finance Minister Lim Guan Eng said strict compliance with fiscal discipline as well as better debt management would continue to be given emphasis to tackle the federal debt of over RM1 trillion.
Lim said good debt management would be maintained to ensure the fiscal position and macroeconomy remained strong for managing any crisis.
“Fiscal accountability would reassure investors and the capital market that the government still has flexibility in fiscal and monetary policies,” he explained.
The local bourse had pulled away from the selldown since the shocking victory of the Pakatan Harapan coalition in the 14th general election on May 9. The index has been on the mend since reaching its 2018 low of 1,663.86 points on July 6.
In a note of caution, however, Kenanga Research said that despite the gains made by the index in recent days, stochastic indicators had been in the overbought territory without any correction over the past two weeks.
“From here, we think that a shortterm consolidation could be necessary before a continuation of its underlying rally,” the brokerage said.
Kenanga Research said a correction could see the index fall to its immediate support level of 1,750 or second support level of 1,720 points. Should there be a positive turnaround, the index could rise to 1,830.
TA Research shared a cautious outlook for the market.
“Upside bias appears to be limited in the near term, with the overbought technical condition and external uncertainties due to the US-China trade conflict likely to dent local trading sentiment,” the brokerage explained.
TA Research has pegged the next hurdle for the FBM KLCI at 1,824, after the index breached the 1,800point mark yesterday. Its immediate support for the index stood at 1,777, with the next support seen at 1,740 points.
Driving the FBM KLCI gains yesterday were Axiata Group Bhd (+21 sen to RM4.55), Genting Malaysia Bhd (+17 sen to RM5.30), Dialog Group Bhd (+11 sen to RM3.46), Hartalega Holdings Bhd (+17 sen to RM6.34) and Press Metal Aluminium Holdings Bhd (+10 sen to RM4.99). Regionally, markets were mixed. Japan’s Nikkei fell 0.08% to 22,644.31; China’s Shanghai Composite Index lost 1.27% to 2,744.07 and Singapore’s Straits Times declined 0.4% to 3,326.74 points.
Conversely, Hong Kong’s Hang Seng Index rose 0.39% to 28,359.14 and South Korea’s Kospi gained 0.06% to 2,301.45 points.