What to expect on Bursa Malaysia this Monday

BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:

Inter-Pacific Research

The FBM KLCI mounted a firm rebound on Friday to surge past the 1,400 level convincingly amid strong buying interest from foreign funds.

It also allowed the key index to reach a two-month high as there were stronger bargain hunting on many index-linked stocks.

Lower liners and broader market shares also followed suit with technology stocks again the day’s big movers. Gainers were also convincingly ahead of losing stocks amid a strong surge in traded volumes to 4.0 billion shares on Friday.

The buying momentum has been picking up pace over the past week to not only arrest the FBM KLCI’s downtrend but also to stage a decent comeback from 1H 2023’s malaise.

In particular, foreign funds are turning net buyers of late and this has been the main catalyst lifting the key index higher.

Foreign funds could also be seen as re-positioning their portfolios for 2H 2023 and picking up Malaysian stocks whose valuations are seen as compelling following their incessant falls earlier.

However, the start of the week could see some mild pullback as Friday’s surge is seen as overdone. Hence, expect mild profit to emerge even as the market’s undertone is still positive.

The pullback could see the key index retreating to the 1,406 level with the ensuing support set at the psychological 1,400 level. The hurdles, meanwhile, are at the 1,417-1,420 levels as well as 1,423 points.

Malacca Securities Research

With the key index re-claiming the 1,400 psychological level, we reckon that the recovery trend has turned more solid.

We noticed that foreign funds have stepped up to purchase Malaysian equities (net buying of RM468.9 mil last Friday) and that could sustain the recovery trend, moving forward.

Meanwhile, lower liners may continue to capitalise onto the jubilant market sentiment as the calmer market conditions present an opportunity to nibble onto beaten down stocks.

Looking ahead, the barrage of corporate earnings releases in the US will be in focus. Meanwhile, investors will also be keeping a close watch on the impending release of China’s 2Q 2023’s gross domestic product (GDP) data today.

Commodities-wise, Brent crude retreated below US$80/barrel while crude palm oil (CPO) remained above RM3,800/metric tonne.

The FBM KLCI gapped up to form a bullish candle as the key index closed at the highest level since end-May 2023. Technical indicators were positive as the MACD Histogram formed another positive bar while the RSI remained above 50.

Should the 1,400 remain sustainable, the next resistance will be envisaged along 1,430-1,450 while the support is pegged around 1,370. – July 17, 2023

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