Bursa Malaysia likely to see further gains next week

The FTSE Bursa Malaysia KLCI (FBM KLCI) is likely to rise further next week on the back of better overnight Wall Street performance on Friday coupled with the recently-announced National Economic Recovery Plan (Penjana) incentives.

A market analyst said the FBM KLCI would continue to stage a significant increase next week; however, it might encounter some profit-taking after seeing an incremental increase for eight days straight, after making significant gains in the past week.

“Rotational play would be on the cards for traders, who are expected to swap among banking, healthcare, consumer and industrial products and services, automotive and plantation sector stocks,” the analyst told Bernama today.

Meanwhile, Malacca Securities Sdn Bhd analyst Kenneth Leong concurred that the benchmark index might head higher in the coming week following the slew of measures under Penjana.

“At the same time, the market may also be buoyed by the stronger performance across global markets amid the stronger-than-expected economic data, stimulus measures announced across the globe and higher crude oil prices ahead following the brought-forward Organisation of the Petroleum Exporting Countries (Opec) meeting today (June 6) to discuss extending production cuts,” he said.

On the full sales tax exemption on locally-assembled passenger cars and 50 percent sales tax exemption for imported passenger cars from June 15 to the end of the year, Leong said shares in the automotive sector had risen on Friday due to these tax measures that would invigorate automotive sales for the second half of the year.

He also said the property sector would be boosted by Penajan measures such as the stamp duty exemption on the instruments of transfer and loan agreement under the Home Ownership Campaign to be reintroduced as well as real property gains tax exemption for disposal of up to three units of residential homes per individual (from only first-home purchases previously).

On the RM20 million “Buy Malaysia” campaign, he said it would benefit shares linked to consumer and industrial products and services in the near term.

Another market analyst said the export duty exemption for crude palm oil, crude palm kernel oil and processed palm kernel oil from July to December 2020 augured well for plantation stocks and advised investors to buy shares in companies like FGV Holdings.

However, Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid cautioned investors to be mindful of the significant gains already made by the FBM KLCI in the past week (closing near a four-month high on Wednesday and five-month high on Thursday).

“From the price-to-earnings (PE) valuation standpoint, the FBM KLCI seems to be on the high side with PE ratio hovering around 20 times, which is higher than plus-one standard deviation of 17 times,” he said, adding that technical readings also seemed to indicate the key index was in an overbought condition.

“Therefore, we can expect a correction to happen in the immediate term,” he said.

MIDF Research strategy head Syed Muhammed Kifni Syed Kamaruddin said the equity market might have reached its midway bottom.

“As it turned out, in line with the general retracement of the world’s equity markets, the benchmark FBM KLCI has since rebounded by more than 230 points,” he said.

Syed Muhammed Kifni said the price retracement was buoyed by the flattening of the Covid-19 curve both internationally and domestically (the number of active cases in Malaysia is on a clear declining trend) and massive liquidity injections either directly or via interest rate cut as well as a series of fiscal stimulus both internationally and domestically.

“Intermittently, claims of progress made on the development of a Covid-19 vaccine also helped to excite the world’s equity markets,” he said in a note.

On a Friday-to-Friday basis, the index rose 83.08 points to end at 1,556.33.

On the scoreboard, the FBM Emas Index expanded 466.93 points to 10,930.78, the FBMT 100 Index surged 479.03 points to 10,792.24 and the FBM Emas Shariah Index soared 281.88 points to 12,307.1.

The FBM 70 rose 196.64 points to 13,391.84 and the FBM ACE Index increased 232.72 points to 5,852.53.

Sector-wise, the Industrial Products and Services Index gained 8.99 points to 139.05, the Plantation Index was 1.85 points higher at 6,787.02, and the Financial Services Index surged 1,243.28 points to 13,726.02.

For the week just-ended, weekly turnover soared to 46.04 billion units worth RM32.19 billion from 23.18 billion units worth RM19.53 billion in the previous week.

Main Market volume almost doubled to 26.91 billion shares worth RM16.95 billion against 13.58 billion shares worth RM16.95 billion previously.

Warrants turnover improved to 3.22 billion units worth RM885.64 million compared with 1.71 billion units worth RM521.91 million in the week before.

The ACE Market volume gained to 15.89 billion shares worth RM5.66 billion versus 7.88 billion shares worth RM2.06 billion previously.

The market will be closed on Monday, June 8, in conjunction with the birthday of the Yang di-Pertuan Agong. It will reopen on June 9.

- Bernama