BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
Malaysian equities ended the year on a whimper on renewed profit taking activities. However, the key index’s 2.4% gain for 2020 is an outperformance as it was ahead of most of its ASEAN peers that closed with losses for the year.
Market breadth on the last trading day was negative as losers overtook gainers with plantation giant Sime Darby among the top losers after the US banned its palm oil from entering the country.
Meanwhile, traded volumes slipped to its lowest level in two months as most market participants were on the year-end break.
The start of the New Year could see renewed bargain hunting activities with the return of many market players from their holidays.
The strong closing among key global stock indices on the last trading day of 2020 could translate to increased buying impetus and lead to a firmer start of the year for Malaysian equities.
Much of the optimism stems from the prognosis that both global economic and corporate earnings recovery should strengthen in 2021 as the COVID-19 pandemic is widely expected to taper with the vaccine availability.
As such, we think the FBM KLCI could look to re-challenge the 1,630-1,640 levels to start the year and if the buying interest continues to firm-up, the 1,650 level may also be re-tested.
On the other hand, the supports are at 1,620 and 1,600 points respectively.
Malacca Securities Research
After recording 2.4% year-on-year (yoy) gain in 2020, we reckon that the FBM KLCI is poised for further upsides moving into 2021.
The extended gains will largely be dictated by the pace of economic recovery, coupled with the roll-out of COVID-19 vaccine progress in Malaysia.
Coming closer, bargain hunting activities may emerge from the previous session sell-down, but gains are likely to be tepid owing to the surge in number of new COVID-19 cases reported.
We also expect the lower liners to march higher, driven by the resumption of improve trading liquidity.
The FBM KLCI has formed a bearish candle to retreat below the daily EMA20 level, suggesting that the pull-back is still in place. Still, we think that bargain hunting activities may emerge as investors nibble on beaten down stocks.
For now, the1,660-1,680 will serve as the immediate resistances. Support is located at around 1,620 followed by 1,600. – Jan 4, 2021
