Malaysian <b>stocks</b> to stay bullish, driven by steady <b>buying</b> <b>...</b>

KUCHING: On the back of steady buying support, the Malaysian bourse is expected to show resilience despite facing stiff headwinds ahead.

While immediate upside movements may be gradual, its downside risk on the other hand will likely be fairly limited too noted analyst Goh Yin Foo of HwangDBS Vickers Research Sdn Bhd.

“This was actually what happened last week when the bellwether was caught within a 22.2-point range before closing at 1,776.56 on Friday, barely budged from the preceding week’s closing of 1,776.16.

“A mixed performance, nevertheless, was registered by the FTSE Bursa Malaysia 70 (FBM 70) Index, the FBM Small Cap Index  and the FBM ACE Index.

Daily average trading volume stood at 1.8 billion shares valued at RM1.7 billion, compared with the preceding week’s 2.1 billion units worth RM1.8 billion,” noted Goh.

The analyst further explained that essentially, investors were just mulling over their next course of action while waiting for fresh market leads to surface.

Overseas, the spotlight is on how long more the partial shutdown of the US government arising from failed budget talks would drag on, which in turn might cast a shadow on the impending negotiations by the lawmakers from both sides of the political divide to raise the US debt ceiling.

There may also be interest in the minutes of the US Federal Open Market Committee meeting held on September 17 to 18 – to be released this Wednesday – detailing the decision process of the policymakers in deferring their plan to start the tapering of quantitative easing measures.

On the home front, Goh pointed out that, on tap are just sporadic news flows for investors to chew on in the week ahead.

Routine macro reports to watch out for include the index of industrial production for August and the September plantation statistics (both due on Thursday).

Aside from that, the commencement of gold futures trading on the derivatives market effective yesterday may draw interest from selected market players.

On a positive note, foreign selling of Malaysian equities has stopped (at least for now), says Goh.

“According to the data released by the stock exchange last week, foreigners turned net buyers on our local bourse with a marginal amount of US$0.2 billion (RM0.7 billion) in September, thus snapping a three-month net foreign selling streak of an aggregate sum of US$3.3 billion between June and August,” the analyst added.

Meanwhile, the weekly foreign trading pattern showed continuous net outflows of US$150 million in Thailand last week, US$117 million in Indonesia and US$647 million in Philippine.

“From a technical perspective, the FBM Kuala Lumpur Composite Index (FBM KLCI) will probably remain in an oscillating pattern following a false breakout from a negative sloping trend line (in red on chart overleaf) two and a half weeks ago.

“As bargain-hunters appear eager to step in when selling pressures intensify, our local bourse performance may still be resilient going forward, with the FBM KLCI’s downside risk to be cushioned by our first support line at 1,750.

“While its immediate upside is presently being kept in check by a lack of buying catalysts, beyond the short-term lull, a breakaway from the psychological threshold of 1,800 could propel the benchmark index to challenge its all-time high of 1,826.22 in due course.”