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

There were follow through buying interest among the index-linked stocks at the start of the month that allowed the key index to extend its gains for a second consecutive day.

Much of the support were from the continuing foreign buying interest to offset the selling by local institutions.

Nevertheless, most Bursa sector indices were in the red with energy stocks falling the most and market breadth remaining negative albeit marginally. Traded volumes were also reduced by nearly a quarter from a day earlier.

The sustained gains on key index are encouraging and is raising hopes that there could be more near-term gains ahead as the FBM KLCI also looks to possibly end the year on a firmer note.

As it is, there appears to be sustained buying support from foreign institutions that could also help to prolong the upward streak as these funds continue to bargain hunt on stocks seen to be undervalued vis-à-vis the potential earnings growth in 2024.

The recent positivity among key global indices that are reacting to the prospects of peak interest rates could also help Bursa Malaysia stocks to make further near-term headway.

However, the upsides may still be gradual as local institutions are unwinding some of their positions when they provided the support in the most recent market downtrend. The immediate target is set at the 1,460 level followed by the recent highs at the 1,462-1,465 levels. The supports, meanwhile, are 1,453 and the psychological 1,450 level.

Malacca Securities Research

Following the bullish engulfing last week on the FBM KLCI, buying support has continued within selected telecommunication heavyweights which lifted the FBM KLCI higher for the second session.

Meanwhile, with the US Federal Reserve’s chairman Jerome Powell having offered optimism on the progress that the US central bank’s 2% inflation target is well on track, the Dow Jones and S&P500 have surged to their highest close in 2023 with the market looking at a peak of interest rate and looking for rate cut potential in 2024.

For this week, we expect traders to focus on the (i) ISM Services PMI, (ii) jobs data such as unemployment claims, unemployment rate and non-farm payroll.

On the commodity markets, Brent oil prices traded below US$80/barrel as traders were not convinced by the additional voluntary cuts from OPEC+ members while the gold price surged towards an all-time-high at on the back of rate cut optimism.

The FBM KLCI ended higher following the bullish engulfing bar. The technical readings on the key index are positive with the MACD Histogram forming a rounding bottom formation while the RSI maintained above the 50 level.

The resistance is pegged around 1,460-1,465 while the support is at 1,430-1,440. – Dec 4, 2023

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