Bursa Malaysia likely to breach 1,700 psychological barrier

The local stock market is expected to buck the downward trend this week. (Reuters pic)

KUALA LUMPUR: Bursa Malaysia is likely to stage a strong rebound with the key index breaching the 1,700 psychological level next week after a spell of downtrend seen in recent days dragged by profit-taking.

Inter-Pacific Securities head of research Pong Teng Siew said this would be backed by foreign investors’ sentiment which had turned more optimistic towards the local stock market, particularly after the US-China trade truce.

“We have seen the comeback of foreign net buying in a more consistent basis in these couple of weeks, which could help stabilise the local stock market,” he told Bernama.

Pong said the foreign net buying in local equities amounted to RM534 million from May 31 to last Wednesday.

Based on Amanah Investment Bank Bhd Research’s weekly report, overseas fund managers bought RM134.6 million of stocks on Bursa Malaysia in June, the first monthly net inflow in five months.

Phillip Capital Management Asia-Pacific senior vice-president (Investment) Nazri Khan Adam Khan expected fresh momentum for the FTSE Bursa Malaysia KLCI (FBM KLCI) next week towards the 1,700 psychological resistance level, in response to the resumption of US-China trade talks.

“Thus, our upside view is enhanced, with current support and resistance levels now pegged at 1,660 and 1,700, respectively,” he said, adding that consumer and construction stocks would be in focus next week.

For the week just ended, Bursa Malaysia was traded higher in the first two days but retreated thereafter, as the local bourse succumbed to profit-taking amid an overbought market.

The benchmark index closed at a nearly four-month high on Tuesday at 1,691.