BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
Malaysian equities started 2H 2023 with a bang as it mirrored the upbeat performances of regional and global equities to head higher.
Foreign buying on selected index-linked stocks was the main catalyst for the key index’s surge yesterday, particularly on plantation and banking heavyweights, casting aside the still weak manufacturing PMI.
Most Bursa Malaysia sector indices also rose, allowing for market breadth to turn positive but much of the gains were on relatively benign volumes that was little changed from Friday.
Yesterday’s gains on Bursa Malaysia helped to neutralise some of the recent market pullback. In the process, it also allowed the key index to regain the upsides from last month’s mild window dressing activities.
Although foreign funds turned buyers yesterday to halt their selling streak, it remains to be seen if the buying interest will sustain, otherwise quick profit taking activities could emerge.
With market conditions staying mildly positive, however, there could be more near-term gains as market players continue to bargain hunt amid the FBM KLCI’s still compelling valuations that are below its historical forward averages.
On the upside, the next target is the psychological 1,400 level, followed by 1,406 points. The immediate support is at 1,390 points, followed by 1,385 points.
Malacca Securities Research
The FBM KLCI was powered sharply higher, approaching the 1,400 psychological level after foreign funds turned net buyer for the first time in 14 trading days.
While yesterday’s gains may provide room for further near-term upsides on the back of the healthier near-term outlook, we think the buying could still be selective after many of the heavyweights made large strides.
We believe that near term focus will be centred on the state elections which will provide further impetus for the key index as well as the recovery of lower liners.
Commodities-wise, Brent crude staged a mild pullback towards US$75/barrel while crude palm oil (CPO) price surged above RM3,900/metric tonne following the smaller-than-expected soybean plantings in US.
The FBM KLCI formed a bullish candle to claw its ways back above daily EMA20 as the key index is now approaching 1,400. Technical indicators turned better as the MACD Histogram turned positive while the RSI recovered above 50.
The immediate resistances are envisaged along 1,413-1,430 while the support is pegged around 1,370. – July 4, 2023
