MARKET DEVELOPMENT
Expect Some Rebound This Week
Expect Some Rebound This Week
28/09/2015 (Borneo Post) - The market pulled back as expected as it was technically overbought in the short term two weeks ago. The market was weighed down by the ringgit which fell to fresh 17 year lows. There are concerns about 1Malaysia Development Board (1MDB) probe that has extended to Europe and Moody’s Corp rated Malaysia credit rating but traders saw it six levels lower, which is likened to junk bond status.
Investors continue to flock out of Bursa Malaysia as this overshadowed the RM20 billion injection by the government. The FBM KLCI declined 3.3 per cent in a week to 1,615.01 points on Friday.
Trading volume continued to decline as the market turned cautious. The daily average volume in the past one week was 1.8 billion shares as compared to 2.3 billion shares two weeks ago. Average trading value declined RM2.5 billion two weeks ago to RM2 billion in the past one week.
Foreign buy in to the stock market two weeks ago was short-lived. They turned net sellers again in the past one week.
From Monday to Friday last week, net selling from foreign institutions was RM1.2 billion while net buying from local institutions and local retail were RM1.1 billion and RM0.1 billion respectively.
Only three counters increased in FBM KLCI from last week and they were YTL Corporation Bhd (1.3 per cent from last week), Petronas Dagangan Bhd (one per cent) and Sime Darby Bhd (one per cent). Top decliners were Genting Malaysia Bhd (8.5 per cent), AMMB Holdings Bhd (8.1 per cent) and Genting Bhd (6.2 per cent).
Regional indices
Markets in Asia were bearish on China’s production slowdown. China’s Shanghai Stock Exchange Composite Index was directionless throughout the week declined marginally from last week to 3,091.81 points.
Hong Kong’s Hang Seng Index fell 3.4 per cent to 21,186.32 points. Japan Nikkei 225 index declined 1 per cent in a week to 17,880.51 points and Singapore’s Straits Times declined 1.6 per cent to 2,832.64 points.
Markets declined on worries over slowdown in economic activity and Germany equity market fell to 10 month lows.
On Thursday, the US Dow Jones Industrial Average fell 2.8 per cent in a week to 16,201.32 points. Germany’s DAX Index declined 7.8 per cent to 9,427.64 points, the lowest in 10 months. London’s FTSE100 fell 4.0 per cent in a week to 5,952.02 points.
Commodities
The US dollar increased against major currencies, a surprise to the market as the US Federal Reserve maintained interest rates near zero.
The US dollar index increased from 94.7 points a week ago to 96.2 points last Thursday. COMEX gold price increased 2.3 per cent in a week to US$1,153.80 an ounce. WTI crude oil continued trading sideways in the past one week.
The price decline 3.8 per cent to US$45.10 per barrel this week. Crude palm oil in Bursa Malaysia jumped 11.0 per cent in a week to RM2,342 per metric tonne on weak ringgit and increasing demand.
Observations
The FBM KLCI rebounded last Friday despite being bearish most of the days last week. Bargain hunters may have looked for opportunities from the decline. The rebound came as the index tested the short term 30-day moving average at 1,604 points.
However, the index is still below the Ichimoku Cloud indicator and the RSI indicator is below its mid-level. This indicates that the trend is still bearish.
Momentum indicators were mixed. The RSI and Momentum Oscillator continued to decline below their mid-levels but the MACD indicator is still above its moving average.
The index is at the middle band of the narrowing Bollinger Bands indicator. This indicates uncertainty. If the FMKLCI can stay above the immediate support level at 1,600 points, then we may see a continuation of the upwards trend as the support levels get higher.
The last support level was at 1,568 points. Higher support levels indicate a bullish trend.
The market is expected to rebound this week but to continue its bullish trend, it has to break above the immediate resistance level at 1,692 points.
However, if the index can’t hold above 1,600 points, then we expect the market to weaken further and the index to fall to the previous support level at 1,568 points.
Trading opportunities are in the plantation and export-oriented companies.
Investors continue to flock out of Bursa Malaysia as this overshadowed the RM20 billion injection by the government. The FBM KLCI declined 3.3 per cent in a week to 1,615.01 points on Friday.
Trading volume continued to decline as the market turned cautious. The daily average volume in the past one week was 1.8 billion shares as compared to 2.3 billion shares two weeks ago. Average trading value declined RM2.5 billion two weeks ago to RM2 billion in the past one week.
Foreign buy in to the stock market two weeks ago was short-lived. They turned net sellers again in the past one week.
From Monday to Friday last week, net selling from foreign institutions was RM1.2 billion while net buying from local institutions and local retail were RM1.1 billion and RM0.1 billion respectively.
Only three counters increased in FBM KLCI from last week and they were YTL Corporation Bhd (1.3 per cent from last week), Petronas Dagangan Bhd (one per cent) and Sime Darby Bhd (one per cent). Top decliners were Genting Malaysia Bhd (8.5 per cent), AMMB Holdings Bhd (8.1 per cent) and Genting Bhd (6.2 per cent).
Regional indices
Markets in Asia were bearish on China’s production slowdown. China’s Shanghai Stock Exchange Composite Index was directionless throughout the week declined marginally from last week to 3,091.81 points.
Hong Kong’s Hang Seng Index fell 3.4 per cent to 21,186.32 points. Japan Nikkei 225 index declined 1 per cent in a week to 17,880.51 points and Singapore’s Straits Times declined 1.6 per cent to 2,832.64 points.
Markets declined on worries over slowdown in economic activity and Germany equity market fell to 10 month lows.
On Thursday, the US Dow Jones Industrial Average fell 2.8 per cent in a week to 16,201.32 points. Germany’s DAX Index declined 7.8 per cent to 9,427.64 points, the lowest in 10 months. London’s FTSE100 fell 4.0 per cent in a week to 5,952.02 points.
Commodities
The US dollar increased against major currencies, a surprise to the market as the US Federal Reserve maintained interest rates near zero.
The US dollar index increased from 94.7 points a week ago to 96.2 points last Thursday. COMEX gold price increased 2.3 per cent in a week to US$1,153.80 an ounce. WTI crude oil continued trading sideways in the past one week.
The price decline 3.8 per cent to US$45.10 per barrel this week. Crude palm oil in Bursa Malaysia jumped 11.0 per cent in a week to RM2,342 per metric tonne on weak ringgit and increasing demand.
Observations
The FBM KLCI rebounded last Friday despite being bearish most of the days last week. Bargain hunters may have looked for opportunities from the decline. The rebound came as the index tested the short term 30-day moving average at 1,604 points.
However, the index is still below the Ichimoku Cloud indicator and the RSI indicator is below its mid-level. This indicates that the trend is still bearish.
Momentum indicators were mixed. The RSI and Momentum Oscillator continued to decline below their mid-levels but the MACD indicator is still above its moving average.
The index is at the middle band of the narrowing Bollinger Bands indicator. This indicates uncertainty. If the FMKLCI can stay above the immediate support level at 1,600 points, then we may see a continuation of the upwards trend as the support levels get higher.
The last support level was at 1,568 points. Higher support levels indicate a bullish trend.
The market is expected to rebound this week but to continue its bullish trend, it has to break above the immediate resistance level at 1,692 points.
However, if the index can’t hold above 1,600 points, then we expect the market to weaken further and the index to fall to the previous support level at 1,568 points.
Trading opportunities are in the plantation and export-oriented companies.