PETALING JAYA: As the United States races against time to launch a new economic stimulus ahead of the Nov 3 presidential poll, global stock markets, including Bursa Malaysia, are basking in improved investor optimism.
A statement by House of Representatives speaker Nancy Pelosi that a stimulus deal must be finalised by tomorrow has helped to ease market jitters that were worsened by the surging Covid-19 cases in Europe and most US states.
On the domestic front, the FBM KLCI rose by 14.27 points or 0.95% to 1,518.11 yesterday.
This compares with the 26.6 points decline last week witnessed by the 30-stock index on a week-on-week basis.
Although the week has begun on a positive note, experts remained cautious on Bursa Malaysia’s outlook.
According to a bank-backed brokerage, the FBM KLCI is affected by downside bias amid spiking Covid-19 cases and domestic political tussles.
The brokerage said the FBM KLCI’s near term outlook has turned negative, unless it stages a swift retake above the 50-day simple moving average resistance level near 1,530 points.
In the event the index fails to make the swift retake, it could be potentially “reignite another selloff towards the 1,488,1, 474 and 1,461 territory”.
Sector-wise, major beneficiaries from the ongoing second wave of Covid-19 in Malaysia are gloves, technology, telecommunications and courier while sectors most vulnerable appear to be aviation, retail, food and beverages, gaming, malls and hotels, ” the brokerage said in a note.
According to Kenanga Research senior analyst Goh Yin Foo, the FBM KLCI faces a downward bias, pointing out that there is a dearth of fresh catalysts for the stock market.
Goh said the tug-of-war between the bulls and the bears dragged on and this would likely result in the FBM KLCI trading range-bound for the time being.
“For the week ahead, investors will still be monitoring the local Covid-19 situation and political scene for possible stock market implications, ” said Goh.
Meanwhile, TA Securities Research said the FBM KLCI was bogged down by renewed bearish momentum flashed by technical indicators.
Following the 26.6 points drop last week, the index is expected to extend its downward correction this week.
“Domestic political uncertainties, resurgent Covid-19 infections and fresh lockdown measures in multiple districts and areas in Selangor, Klang Valley and other states are the main factors dampening market sentiment.
“Nonetheless, the bright spot should continue to be the healthcare sector, with rubber gloves, personal protective equipment and vaccine-related stocks likely to benefit from a protracted virus pandemic to attract strong bargain hunting interest.
“Defensive banking, gaming, and utility related stocks such as AMMB Holdings Bhd, CIMB Group Holdings Bhd, RHB Bank Bhd, Axiata Group Bhd, Digi.com Bhd, Genting Bhd, Genting Malaysia Bhd and Tenaga Nasional Bhd should continue to attract bargain hunters, ” it said in a note.
On top of the market uncertainties, Bursa Malaysia was affected by the continued outflow of foreign funds.
In the Oct 12-16 week, net selling by foreigners widened to RM237.09mil compared with RM28.38mil outflow in the preceding week, MIDF said in its weekly fund flow report.
Cumulatively for October, foreign investors were net sellers to the tune of RM809.38mil. Year-to-date up to Oct 16, foreign net selling has reached RM22.59bil worth of equities on Bursa Malaysia.
Last week, MIDF Research pointed out that retailers were net buyers of RM133.15mil worth of equities, with local institutions at RM103.96mil net during the same period.
This marked the fourth consecutive weeks of local institutions as net buyers on Bursa Malaysia.
MIDF Research noted that after three consecutive weeks as net sellers, last week saw retailers as net buyers.
“This is a potential signal for the return of buying appetite for retailers with bargain hunting activities, renewed interest in glove stocks with the surge in Covid-19 cases and some political uncertainty subsided, ” according to the research house.