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Bursa shares to see cautious trade next week

January 22, 2011

KUALA LUMPUR: Share prices on Bursa Malaysia are likely to trade within a narrow band next week with investors expected to remain on the sidelines amid profit taking, dealers said.

They said trading on the local bourse as well as regionally could remain cautious next week due to lingering concerns over further monetary tightening policies by China’s government to combat inflation.

However, losses on the local market could be capped by continuous buying by local funds and positive news such as the announcement of construction projects listed in Budget 2011, dealers said.

“The market is tired,” said Affin Investment Bank’s head of retail research Nazri Khan, adding that profit-taking would continue further as the market experienced serious technical correction last week.

He said the market has broken two important support levels, 1,560 and 1,550 after gaining 92% from March 2009.

“Market consolidation has started earlier than expected by most analysts who believed the correction will happen after the Chinese New Year,” he said.
This situation will last for a while, normally within two months as foreign funds would continue to reduce positions, Nazri said.

He said support level was expected at 1,530 while resistance at 1,515 and 1,500, while stocks in focus were consumer-related.

Meanwhile, MIDF Research expected the potential for an overnight policy rate (OPR) hike next week may be the catalyst for the market to break the 1,600 points level.

Banking stocks were expected to rally if the central bank raises the OPR by 25 basis points (bps), next week, it said in a research note.

“We continue to hold our view that Bank Negara will raise OPR by between 50 and 75 bps in 2011, with a 40% possibility of a 25 bps hike in the first-half and the balance in the second-half 2011,” it said.

Bearish trade

For the week just ended, share prices on Bursa Malaysia saw bearish trade due to persistent sell off in key blue chips after the recent strong rally.

Benalec and Tambun Indah Land made an impressive debut on the Main Market with both ending the week at RM1.41 and 78.5 sen respectively.

Benalec made its debut with a 36 sen premium over its offer price of RM1 per share, while Tambun Indah Land made its entry on the Main Market at 80 sen per share, a 10 sen premium over its issue price of 70 sen per share.

On a Friday-to-Friday basis, the FBM KLCI fell 22.46 points to 1,547.43.

The FBM Emas Index declined by 196.74 points to 10,632.06 and the FBM Top 70 Index decreased 175.93 points to 10,358.53 but the FBM Ace Index rose 78.83 points to 4,271.81.

The Finance Index eased 302.62 points to 14,017.05, the Plantation Indexslipped 148.55 points to 8,091.12 and the Industrial Index shed 21.27 points to 2,907.03.

Total weekly volume fell to 7.133 billion shares valued at RM9.585 billion from 12.254 billion shares worth RM13.678 billion last week.

The Main Market turnover decreased to 6.195 billion shares worth RM9.382 billion from 10.492 billion shares valued at RM13.284 billion previously.

Turnover on the ACE Market jumped to 1.028 billion shares valued at RM47.267 million from 652.877 million shares worth RM74.521 million last Friday.

Warrants declined to 577.586 million units valued at RM140.188 million from 1.042 billion units worth RM266.373 million previously.

– Bernama


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