Affin Investment Bank head of retail research Nazri Khan said weaker commodities, falling ringgit, eurozone fears, absence of China’s monetary stimulus and disappointing global economic data, are expected to dampen buying sentiment on Bursa Malaysia next week.
“The fact that global equities closed the month of May at their worst performance since September last year may likely weigh on the local index as we move into June.
“We expect borrowing costs for Spain and Italy to surge as Madrid attempts to rescue troubled lender, Bankia, and this will pose the biggest concern in the near-term,” he told Bernama.
Nazri said there would be more volatility simply because investors do not see a credible resolution in the Eurozone and do not find signs of re-acceleration in stable economies, especially in the US, China, India and Brazil.
News that India’s Gross Domestic Product dropped below 6% for the first time in three years and Brazil’s central bank cutting interest rates to historic lows also suggest that the Eurozone crisis may have affected fast rising emerging markets and global economies at large.
“We reckon there will be more weak conviction among investors about a near-term resolution of the Eurozone debt problems and therefore we expect investors to flock out of equity and into government bonds,” Nazri said.
On the domestic front, Nazri expected the market to start pricing in political concerns ahead of the 13th general election after the launch of Felda’s prospectus.
For the week just-ended, the market was mostly higher, despite cautious sentiment regionally due to uncertainty in the Eurozone and weak data from the US.
On a Friday-to-Friday basis, the FBM KLCI added 22.47 points to 1,573.59.
The Finance Index earned 203.62 points to 14,028, the Industrial Index rose 44.79 points to 2,755.48 and the Plantation Index advanced 152.06 points to 8,329.78.
The FBM Emas Index jumped 147.69 points to 10,729.15, the FBM ACE Index shed 51.86 points to 4,224.84, the FBM Mid 70 Index surged 152.35 points to 11,649.35 and the FBM T100 Index improved 148.27 points to 10,557.29.
Weekly volume fell to 4.3 billion shares, valued at RM7.03 billion, from 4.35 billion shares, worth RM6.14 billion, registered last week.
Main Market turnover advanced to 3.03 billion shares, worth RM6.85 billion, from 2.87 billion shares, valued at RM5.92 billion, recorded last week.
Volume on the ACE Market decreased to 775.57 million shares, worth RM112.84 million, from 958.33 million shares, valued at RM140.44 million, transacted previously.
Warrants decreased to 483.14 million units, worth RM65.17 million, against last week’s 497.66 million units valued at RM64.92 million.