The Malaysia stock market has finished lower in three straight sessions, sinking almost 20 points or 1.2 percent along the way. The Kuala Lumpur Composite Index now rests just beneath the 1,410-point plateau and it may take further damage again on Thursday.
At 9.20am, the FBM KLCI opened at 1408.60.
RHB Retail Research, in a note today (May 25), said the FKLI’s correction was extended for the third straight session, and it shed 3 pts to close at 1,406 pts yesterday – the lowest close since 30 Mar.
It opened at 1,409.50 pts, then climbed to the day’s high of 1,414.50 pts before reversing direction to print the day’s low of 1,404 pts before closing. The latest bearish price action confirms that market sentiment is negative.
Towards the upside, the 200-day SMA line is trending south, thereby enhancing the bearish setup. An extension of the “lower low” would see the index testing the 1,400-pt psychological support.
The next support will be the YTD low, ie 1,382 pts.
Meanwhile, if a counter-trend rebound happens, the upside movement will be capped by the 1,425-pt resistance. As the bears have tightening their hold on the index, RHB keeps their negative trading bias unchanged.
Malacca Securities, on the day ahead, said the FBM KLCI sank for the third straight session amidst broad-based selloff, dragged by persisted selling momentum in selected banking, plantation, and health care heavyweights.
The longer-than-expected negotiation on the deal to raise the U.S. debt ceiling may continue to stoke worries on both the local and regional markets.
Nevertheless, bargain hunting activities may emerge on counters with brighter outlook amid local earnings season. Commodities wise, Brent crude oil traded above USD78, while CPO price hovered above RM3,400.
Meanwhile, gold traded above USD1,950.
Sector focus: The telecommunications, utilities, and REIT might be in focus amid global uncertainties. On the other hand, the technology sector may remain in a downtrend move, taking cue from the decline on Nasdaq overnight.
Meanwhile, Malacca Securities thinks companies with high net cash or low borrowings may shine in the ongoing reporting season.
