Lacklustre KLCI to persist
Cheah Chor Sooi | 24 Nov 2017 00:30
In stark contrast to record-breaking key regional indices such as Japan’s Nikkei 225, Hong Kong’s Hang Seng and Jakarta Stock Exchange Composite indices which are in “bullish but overbought” positions, the FBM KLCI has of late been languishing in the “sideways to bearish” trend.

Stock analysts expect such trend to persist as they do not deem the recently announced third quarter (Q3) GDP at 6.2% year-on-year (yoy) – which pushed the year-to-date (YTD) average GDP to 5.8%, exceeding Bank Negara Malaysia’s full year projection of 5.2-5.7% – to be the right shot in the arm for the local bourse.

Likewise, it can be “mind-boggling” given the sluggish KLCI performance comes at a time when both the ringgit and crude oil prices are strengthening. Year-to-date (as of Nov 22), the local currency has appreciated 8% against the greenback to 4.1237 from 4.4938 while the Brent crude has spiked above US$63/barrel from RM55.47 for a more than 13.6% gain.

UOB Kay Hian head of research Vincent Khoo attributes the current lacklustre state of the KLCI to relatively unexciting corporate earnings growth and weak policy execution.