The Malaysia stock market has moved higher in four straight sessions, advancing more than 10 points or 0.7 percent along the way. The Kuala Lumpur Composite Index now rests just beneath the 1,430-point plateau although the rally may stall on Monday.
At 9.20am, the FBM KLCI opened at 1,421.74 falling 6.80 points.
RHB Retail Research, in a note today (May 22), said on Friday, the FKLI underwent a rebound for the fourth consecutive session, climbing 3 pts to close at 1,429.50 pts.
It opened at 1,426 pts, printed the day’s low of 1,424.50 pts then trended upwards to record the day’s high of 1,432.50 pts before closing. The latest bullish candlestick or the “higher low” shows that the bulls are picking up speed.
This, with the RSI pushing above the 50% threshold, indicates that there may be a follow-through price action in the session ahead, where the FKLI may end up testing the 1,437-pt resistance.
Although the bulls are gaining strength, there should be strong resistance at 1,437 pts. RHB notes that, since April, the index has been capped by the 1,437-pt threshold. A bullish breakout would confirm that the bulls are in control.
Until this happens, however, RHB sticks to a negative trading bias.
CGSCIMB said Asian stock markets extended rally on last Friday led by Korea’s KOSPI (+0.89%).
The local benchmark FBMKLCI (KLCI) stayed relatively flat at 1,428.54.
Week-on-week, the index posted a gain of 5.62pts or 0.39%. Sectors wise, utilities (+1.02%), construction (+0.65%) and REIT (+0.35%) were the top gainers for the day.
Conversely, technology (-1.32%), energy (-0.65%) and industrial products (-0.61%) were the top laggards.
Trading volume grew to 2.85bn (up from 2.65bn on Thursday) whereas trading value slid slightly to RM1.81bn (down from RM1.82bn previously). Market breadth turned negative as 360 gainers dragged by 457 decliners.
The benchmark inched up and formed its fourth consecutive white candle last Friday.
However, the buying interest was lacklustre as prices failed to clear the 50-day EMA obstacle, keeping the index in a range-bound mode between 1,416 and1,438.
The benchmark may potentially be building a base above the 1,416 levels as suggested by the ascending triangle (dotted lines) pattern since mid-April.
The 1,416 support levels need to hold up if the bulls are to overcome the overhead resistance (currently at 1,430 and 1,438) in the short term. If a breakout of the said band occurs, then prices may attempt to fill the 10th March gap of 1,445-1,448 next.
Anything below 1,416 is short-term negative for the index. Our portfolio reverts to risk-on mode this week.
Kenanga Research cited the lacklustre performance of the Malaysian bourse could just drag on for the time being given the dearth of fresh catalysts.
The week just ended saw the key FBM KLCI slipping to a low of 1,416 last Monday before recouping the initial losses subsequently to finish at its intra-week high of 1,429 on Friday, up 5.6 points or 0.4% week-on-week. Similarly, on Wall Street, the DJIA fell in the beginning of the week only to recover thereafter to end at 33,427, which translated to a weekly rise of 126.0 points or 0.4%.
With declining counters outnumbering rising stocks in three of the five trading days, the local stock exchange logged daily average trading volume of 2.7b shares valued at RM1.6b, down from the previous week’s average of 3.1b shares worth RM1.8b. And just like the week before, both foreign investors and local retailers sold more shares than they had bought (registering net weekly outflows of RM211m and RM145m, respectively) while domestic institutions remained net buyers after posting net weekly trades of RM356m.
It is going to be a busy week ahead as far as news flows is concerned with financial results taking the limelight. As we enter the final stretch before the corporate earnings reporting season for 1QCY23 draws to a close end-May, listed companies that are due to release their announcements include Petronas Gas, TSH Resources, Thong Guan (on Monday), Sunway Construction (on Tuesday), Maybank, CelcomDigi, Sime Darby, Sime Plantation, KL Kepong, Genting Plantations, Ta Ann, Hap Seng Plantations, Sunway, Media Prima, NationGate (all on Wednesday), Public Bank, Genting Bhd, Genting Malaysia, Axiata, Inari, DRB-Hicom, Dutch Lady, Sime Darby Property, WCT, UOA Development (all on Thursday) and RHB Bank, Affin Bank, UMW, IOI Properties, Kerjaya Prospek (on Friday). In terms of macro data, the April Consumer Price Index report will be out on Friday.
Meanwhile, continuing from last week’s analysis of the upcoming mid-year review of the FBM KLCI constituents, there will likely be one change on the list of component stocks using today’s closing share prices (with an announcement scheduled to be made on 1 Jun). Based on last Friday’s market cap ranking, Inari (which has slipped to the 39th position) may be substituted by either Malaysia Airports (in 28th position) or Westports (in 30th position).
This comes as Inari will probably close today (being the cut-off date) in the 36th position or below (which is the threshold to trigger the omission rule) given that its existing market cap (as of last Friday) remains less than the market cap for Top Glove (ranked 35th) by a sizeable margin of RM1.36b. Standing in as its replacement will be a toss between Malaysia Airports (in 28th position) and Westports (in 30th position) as the former’s market cap was barely higher than the latter by just RM85.9m on Friday.
Overseas, the impasse lingers on as there is still no agreement in sight to raise the US national debt ceiling. To recap, an unresolved (or prolonged) outcome arising from the political stalemate – which will result in the US federal government running out of cash and trigger a default as early as beginning June – could wreak havoc and leave a trail of destructions across the financial world as well as the global economy.
Against this backdrop, our domestic stock market is expected to stay listless in the near term notwithstanding last week’s relatively resilient performance. Last week, all key index trackers ended in positive territory – namely the FBM KLCI (+0.4%), FBM 70 Index (+1.2%), FBM Small Cap Index (+0.3%) and FBM ACE Index (+0.4%) – except for the FBM Fledgling Index (-0.2%). By sector, healthcare (+6.0%), utilities (+2.2%) and energy (+1.2%) attracted the most buying flows while telecommunications & media (-1.9%), industrial products & services (-1.3%) and REIT (-1.0%) were the top weekly losers.
Technically speaking, the FBM KLCI may back off from an intermediate descending trendline as the Parabolic SAR indicator is signalling a downward bias while the 50-day SMA is hovering below the 100-day SMA. Hence, continuing from where it left off, the FBM KLCI could pull back deeper towards our first support level of 1,395 (S1). Our immediate resistance barrier remains at 1,440 (R1).
