Bursa set to sustain positive momentum

PETALING JAYA: Despite closing lower yesterday, Malaysian equities are expected to remain on a bullish trajectory in the near term as sentiment improves, spurred by domestic economic stimulus policies and potentially easier monetary policies overseas, among other things.

Amid the positive momentum, the FBM KLCI could potentially stage a decisive breakout and rise to at least near 1,520 points.

The benchmark index, made up of 30 largest companies by market capitalisation, ended yesterday at 1,493.87 points, down 7.24 points, on profit taking, off an intra-day high of 1,503.73 points and intra-day low of 1,492.40 points.

This followed the strong gains of 13.77 points the FBM KLCI posted on Monday to close at a 14-month high of 1,501.11 points.

“We expect the positive trend to continue in the near term, driven by the return of foreign funds, as Malaysia stock market’s valuation is still deemed inexpensive at current levels, while many still expect that the US interest rates have already peaked,” a trader told StarBiz.

He noted that the recent decision by China’s central bank to maintain its medium-term lending rate at 2.5% was positive for regional stock markets, including Malaysia.

Hong Leong Investment Bank (HLIB) Research in its recent note said if the FBM KLCI could stage a decisive break out from the immediate hurdles of 1,504 to 1,512 points, the next level the index could go to would be the stiffer resistance zones at 1,528 to 1,548 points.

The brokerage said the stock market’s downside was likely to be well-cushioned with key support at 1,465-1,484 levels.

This would be underpinned by favourable domestic leads such as the existing economic transformation blueprints via the National Energy Transition Roadmap, New Industrial Master Plan 2023 and reinvigoration of developments in Johor; rising foreign direct investment momentum, the return of foreign investors, as well as rising risk appetite for the laggard Bursa Malaysia amid US Federal Reserve’s expected pivot.

In addition, the FBM KLCI was currently trading at an undemanding 2024 price-earnings of 13.4 times, against the 10-year mean of 17.2 times.

While Apex Research acknowledged that the trend remained encouraging for the FBM KLCI, the index could stay range-bound in the near term, citing uncertainty in timing of US interest-rate cut.

“Despite the favourable momentum of the FBM KLCI, we maintain our view that the local bourse is likely to remain range-bound, as stubborn inflation in the United States has led to uncertainty in timing on rate cut,” it said.

“Still, signs of return in foreign funds may likely to liven up the local bourse above 1,500 psychological level,” it added.

Meanwhile, Philip Capital Research said technical indicators remained positive, showing the FBM KLCI currently trading above its 50, 100 and 200-day moving averages and above its uptrend line.

Moving forward, the brokerage said the index would likely challenge its 1519.72-point resistance if it could hold above the previous support at 1482.82 points.

TA Research pegged the immediate resistance level at 1,510 points and the next hurdles would be between 1,520 and 1,550 points.

Immediate chart support was still at 1,480 points, with better supports at 1,430 to 1,450 points, it said.