Higher on Chinese New Year speculative play

THE FTSE Bursa Malaysia KLCI (FBM KLCI) is likely to climb over the walls of worry and trend better on a new year liquidity, rising portfolio inflows, Chinese New Year speculative play and an improving United States economic data, dealers said.

However, the local market is expected to see a tug-of-war between the negative external fundamentals and positive local technicals.

“The equity market will face the European turmoil and the ripple effects on global economy versus the feel-good Chinese New Year sentiment and small-cap speculative play next week (this week),” head of retail research at Affin Investment Bank Dr Nazri Khan told Bernama.

He believed that the direction of the Italian bond market, a crucial issue for now and the credit rating downgrades which may happen anytime following the December warnings, would be major concerns that could limit any near-term upside.

“However, we believe the stronger US economic data seen is likely to cushion downside concerns on Europe,” Nazri added.

At the local level, he expects positive news flow and impressive leadership from technology and plantation sectors as well as talks on Proton management buyouts and Tabung Haji potential bids for QSR to sustain the local equity momentum.

Despite a choppy first week in 2012, testing the fragile investor confidence amid the eurozone’s debt crisis, the FBM KLCI managed to end the week above the 1,500-level. The market barometer fell 16.6 points to 1,514.13 from the previous Friday’s 1,530.73.

On a week-to-week basis, the Finance Index dipped 315.04 points to 13,387.71, the Plantation Index gained 274.23 points to 8,436.93 and the Industrial Index added 13.8 points to 2,756.85.

Total weekly volume increased to 6.399 billion shares worth Rm5.785bil from 6.21 billion shares worth Rm6.74bil previously.

Main market turnover dwindled to 4.162 billion shares valued at Rm5.363bil from 4.85 billion shares worth Rm6.55bil previously.