BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
Despite an earlier-than-expected interest rate increase, the key index managed to sustain its recovery with banks providing the lift as they are deemed the main beneficiary of the higher rates.
Elsewhere, conditions were mixed with bouts of bargain hunting helping to arrest the recent weakness among lower liners and broader market shares.
However, market interest was still benign with traded volumes remaining on the low side.
Bank Negara Malaysia’s (BNM) surprise rate hike has certainly caught out many market players that were expecting interest rates to be raised in 2H 2022. While banks are beneficiaries, other interest rate sensitive industries like the property sector could see renewed weakness ahead.
This could leave market conditions choppy for longer as market players realign their portfolios and adjust to a higher interest rate environment where at least another rate hike is expected for the year.
Furthermore, market conditions are staying insipid due to the continuing weakness in global equities that would keep fresh buying interest on Malaysian equities on the low side for longer.
For now, however, the market will attempt to stay above the psychological 1,550 level even as the volatility is sustained.
However, if the level is breached, the supports will be pegged at 1,546 and 1,540 points respectively. The hurdles, on the other hand, remain at 1,563 and 1,570 points respectively.
Malacca Securities Research
The FBM KLCI rebounded with bargain hunting activities in the plantation and banking sector; the latter propelled following BNM’s announcement to increase the overnight policy rate by 25 basis points.
We believe investors should brace for heightened volatility across global markets as Wall Street tumbled overnight in anticipation on a faster pace of interest rate hike and potential further tightening in monetary policies after the higher-than-expected inflation data was released.
Nevertheless, recovery-themed and commodities-related sectors may be favourable ahead of the quarterly reporting season.
Both the crude palm oil (CPO) and Brent crude rebounded, hovering around RM6,500/metric tonne and US$107/barrel.
The FBM KLCI booked marginal gains and remained supported above the SMA200 level. Technical indicators, however, remains negative with the MACD Histogram expanded negatively below zero while the RSI is hovering below the 50 level.
The resistance is set around 1,570-1,580 while support is pegged around 1,545. – May 12, 2022
