MARKET DEVELOPMENT
Market to Remain Bullish
Market to Remain Bullish
14/06/2017 (The Edge Markets MY) - The equity market continued to climb higher last week after a rebound two weeks ago. The FBM KLCI rose to its highest level in two years, following other equity markets that have climbed to recent and historical highs. A stronger ringgit and export data helped boost market sentiment. The FBM KLCI increased 0.7% in a week to 1,788.89 points last Friday and the index closed at 1,784.44 points yesterday.
Trading volume continued to decline. The average daily trading volume fell from 2.5 billion shares two weeks ago to 2.3 billion shares last week. However, the average daily trading value declined from RM2.9 billion to RM2.6 billion. Total market capitalisation rose RM12 billion in a week to RM1,860 billion.
Foreign institutions remained as net buyers on Bursa Malaysia. Net buying from foreign institutions was RM250 million, while net selling from local institutions was RM252 million.
Gainers outpaced decliners two to one on the FBM KLCI. The top gainers for the week were Tenaga Nasional Bhd (+4.4% in a week to RM14.40), Hong Leong Bank Bhd (+3.5% to RM15.20) and British American Tobacco (Malaysia) Bhd (+2.9% to RM45.60). The top decliners were Astro Malaysia Holdings Bhd (-3.5% to RM2.52), Genting Bhd (-2.3% to RM9.76) and AMMB Holdings Bhd (-1.8% to RM5).
Global market performances were mixed last week. Most markets in Asia were bullish except Japan. Hong Kong’s Hang Seng Index continued to climb to a fresh 23-month high. China’s SSEC index rose to a one-month high. Markets in Europe pulled back for a correction after climbing to historical highs two weeks ago, while the US Dow Jones Industrial Average continued to rise to a historical high.
The US dollar has strengthened against major currencies. The US dollar index increased from 96.7 points to 97.3 points last Friday. However, the ringgit also strengthened from RM4.28 to RM4.26 to a US dollar. Prices of commodities generally fell last week. The Commodity Exchange gold price increased 1% in a week to US$1,268.80 (RM5,341.65) an ounce. Crude oil (Brent) fell 3.3% to US$48.30 per barrel. Crude palm oil declined 1.7% in a week to RM2,453 per tonne last Friday.
The FBM KLCI broke above the sideways trend resistance level at 1,780 points as we had expected. This indicated that the sideways correction was over and the bullish trend should continue.
There are no changes to trend indicates on the FBM KLCI chart. The index remains above the short- and long-term 30- and 200-day moving averages, uptrend channel support line and the Ichimoku Cloud. The breakout above the resistance level shows that market sentiment is still bullish.
Furthermore, the Relative Strength Index indicator and momentum oscillators are increasing. This indicates that the bullish trend momentum is strong. The moving average convergence divergence indicator has also climbed above its moving average.
The bullish momentum started to gain traction last week after the index broke above the immediate resistance at 1,780 points. Furthermore, the strong ringgit remains a catalyst for luring more buying from foreign institutions. However, weaker commodity prices could provide some resistance.
Nevertheless, the chart shows that the FBM KLCI is set to climb higher towards the next resistance levels at 1,800 and 1,860 points, especially if the index can stay above 1,780 points.
The above commentary is solely used for educational purposes and is the writer’s point of view using technical analysis. The commentary should not be construed as an investment advice or any form of recommendation. Should you need investment advice, please consult a licensed investment adviser.
Trading volume continued to decline. The average daily trading volume fell from 2.5 billion shares two weeks ago to 2.3 billion shares last week. However, the average daily trading value declined from RM2.9 billion to RM2.6 billion. Total market capitalisation rose RM12 billion in a week to RM1,860 billion.
Foreign institutions remained as net buyers on Bursa Malaysia. Net buying from foreign institutions was RM250 million, while net selling from local institutions was RM252 million.
Gainers outpaced decliners two to one on the FBM KLCI. The top gainers for the week were Tenaga Nasional Bhd (+4.4% in a week to RM14.40), Hong Leong Bank Bhd (+3.5% to RM15.20) and British American Tobacco (Malaysia) Bhd (+2.9% to RM45.60). The top decliners were Astro Malaysia Holdings Bhd (-3.5% to RM2.52), Genting Bhd (-2.3% to RM9.76) and AMMB Holdings Bhd (-1.8% to RM5).
Global market performances were mixed last week. Most markets in Asia were bullish except Japan. Hong Kong’s Hang Seng Index continued to climb to a fresh 23-month high. China’s SSEC index rose to a one-month high. Markets in Europe pulled back for a correction after climbing to historical highs two weeks ago, while the US Dow Jones Industrial Average continued to rise to a historical high.
The US dollar has strengthened against major currencies. The US dollar index increased from 96.7 points to 97.3 points last Friday. However, the ringgit also strengthened from RM4.28 to RM4.26 to a US dollar. Prices of commodities generally fell last week. The Commodity Exchange gold price increased 1% in a week to US$1,268.80 (RM5,341.65) an ounce. Crude oil (Brent) fell 3.3% to US$48.30 per barrel. Crude palm oil declined 1.7% in a week to RM2,453 per tonne last Friday.
The FBM KLCI broke above the sideways trend resistance level at 1,780 points as we had expected. This indicated that the sideways correction was over and the bullish trend should continue.
There are no changes to trend indicates on the FBM KLCI chart. The index remains above the short- and long-term 30- and 200-day moving averages, uptrend channel support line and the Ichimoku Cloud. The breakout above the resistance level shows that market sentiment is still bullish.
Furthermore, the Relative Strength Index indicator and momentum oscillators are increasing. This indicates that the bullish trend momentum is strong. The moving average convergence divergence indicator has also climbed above its moving average.
The bullish momentum started to gain traction last week after the index broke above the immediate resistance at 1,780 points. Furthermore, the strong ringgit remains a catalyst for luring more buying from foreign institutions. However, weaker commodity prices could provide some resistance.
Nevertheless, the chart shows that the FBM KLCI is set to climb higher towards the next resistance levels at 1,800 and 1,860 points, especially if the index can stay above 1,780 points.
The above commentary is solely used for educational purposes and is the writer’s point of view using technical analysis. The commentary should not be construed as an investment advice or any form of recommendation. Should you need investment advice, please consult a licensed investment adviser.