Bullish outlook to boost FBM KLCI to 1,620 level next week

KUALA LUMPUR: The bullish economic outlook on the global front, coupled with expectations of higher demand for crude palm oil (CPO) moving forward, are expected to boost Bursa Malaysia to the 1,620 level next week.

Phillip Capital Management senior vice-president (investment) Datuk Dr Nazri Khan Adam Khan said the positive progress in the US-China trade talks and expectations of higher demand for CPO from India would be among the positive catalysts to boost the local index next week.

”We expect the boost from Wall Street close will help the local market and Asian market trade firmer the following week as investor sentiment has shored up on positive sentiment in Hong Kong and US-China trade negotiations scheduled for next month.

“We believe global stocks including Bursa should be energised by Wall Street cruising to one-month highs, amid optimism over thawing geopolitical tensions after the US and China announced that they would resume trade negotiations next month,” he told Bernama.

India, the world’s biggest refined oil importer, currently imposes a 40% import tax on CPO and 50% on refined palm oils.

However, shipments of refined palm oils from Malaysia have been taxed at 45% due to an agreement between the country and Malaysia.

Nazri said the increased levy will reduce the adequate difference in duty between CPO and refined palm oil from Malaysia for Indian refiners to 5.5% from 11%, making overseas buying more lucrative.

He quoted the Malaysian Palm Oil Board as saying Malaysia’s refined palm exports surged 727% in the first half of 2019 to 1.57 million tonnes compared with the same period last year.

“Besides, the prolonged US-China trade war has seen an increase in investments into Malaysia from the United States based on official data from the Malaysian Investment Development Authority (MIDA),” he added.

On the technical front, Nazri said the FBM KLCI rebounded and returned to above the meaningful 1,600-point psychological support mark, which indicates that the bulls are resilient against the bears.

“Overall, based on the current technical landscape, we opine that the local bourse is still in the process of recovering. The strong support is within 1,600 to 1,572 points. Conversely, the immediate resistance remains at 1,620 and 1,680 points followed by the psychological 1,700-point resistance threshold,” he added.

On Friday, the local market closed higher on improved optimism over the renegotiation of US-China trade.

On a Friday-to-Friday basis, the FBM KLCI decreased 7.67 points to 1,604.47 from 1,612.14.

The FBM Emas Index slipped 67.38 points to 11,281.12, the FBMT 100 Index eased 69.97 points to 11,120.66 and the FBM Emas Shariah Index declined 85.76 points to 11,826.29.

The FBM 70 fell 156.26 points to 13,788.45 and the FBM Ace Index fell 30.82 points to 4,457.38.

Sector-wise, the Financial Services Index contracted 70.85 points to 15,479.17 and the Industrial Products and Services Index inched up 0.42 point to 149.10, while the Plantation Index shed 82.54 points to 6,806.94.

Weekly turnover increased to 8.27 billion units worth RM6.34 billion compared with 10.48 billion units worth RM9.64 billion, due to a shorter trading week.

Main Market volume contracted to 5.07 billion shares valued at RM6.29 billion from 6.49 billion shares worth RM6.28 billion.

Warrants turnover narrowed to 1.73 billion units worth RM396.75 million from 2.51 billion units worth RM561.85 million.

The ACE Market volume rose to 1.48 billion shares worth RM263.66 million from 1.46 billion shares worth RM347.37 million. - Bernama

source https://www.thesundaily.my/business/bullish-outlook-to-boost-fbm-klci-to-1-620-level-next-week-BN1348333