EDITION 171 | July 15, 2017


MALAYSIA  e-Biz

Market Outlook

LIST OF MARKET REPORTS:

1. Bursa Malaysia
2. Forex
3. Money Market
4. FBM KLCI Futures
5. Crude Palm Oil (CPO) Futures
6. Rubber Futures
7. KLIBOR Futures
8. Kuala Lumpur Tin Market (KLTM)
9. Gold Futures

BURSA MALAYSIA

Bursa Malaysia To Rebound Next Week On Improved Demand

By Azlee Nor Mahmud

KUALA LUMPUR -- Bursa Malaysia is expected to stage a further rebound next week, lifted by strong Wall Street performance, Federal Reserve’s dovish statement, steady ringgit and recovering oil price.  

Affin Hwang Investment Bank Vice-President/Head of Retail Research Datuk Dr Nazri Khan Adam Khan said the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) was expected to move above the 1,767 support level next week, failing which, the sell-off from last week might continue.  

“Global stocks have touched record highs amid renewed optimism that the Federal Reserve would maintain a gradual path of policy normalisation, while the ringgit steadied above the crucial 4.300 level,” he told Bernama.  

Nazri said oil prices also rose for a fourth successive session, with Brent attempting to establish a foothold near US$50 a barrel level and at the same time, the ringgit hovered around a one-month high against the greenback following the Bank Negara Malaysia’s (BNM) decision not to raise interest rates.  

He said there were three positive news for the local bourse, namely moderating inflation, stronger Industrial Production Index and accommodative BNM’s overnight policy rates.  

BNM sees increasing upside to the domestic economy, particularly as global growth appears to be more synchronous, driven by higher industrial activity and global trade, said Nazri.  

The week saw total turnover expanded to 9.29 billion units worth RM9.29 billion from eight billion units worth RM8.52 billion last week.  

The Main Market volume was up to 5.62 billion shares valued at RM8.55 billion from 5.51 billion shares valued at RM7.99 billion the previous week.


FOREX: Ringgit To Continue Good Momentum

By Zarul Effendi Razali

KUALA LUMPUR -- The ringgit is likely to continue the positive momentum against the US dollar next week as uncertainty over the safe haven currencies, including the greenback, has shifted investors interest towards emerging currencies, including the ringgit.  

Affin Hwang Investment Bank Vice-President/Head of Retail Research Datuk Dr Nazri Khan Adam Khan said the ringgit hovered around a one-month high against the US dollar this week following Bank Negara Malaysia’s decision not to raise interest rates.

He said the greenback also suffered from US Federal Reserve Chair Janet Yallen's congressional testimony earlier this week which was deemed below expectations.  

“We are encouraged that Bank Negara has decided to maintain OPR at 3.00 per cent. With the announcement, BNM has left OPR unchanged for 15 consecutive months, lending support to the economy and broad market sentiment.  

"Further, Bank Negara sees increasing upside to the domestic economy, particularly as global growth appears to  be more synchronous, driven by higher industrial activity and global trade,” he told Bernama.  

For the week just-ended, the ringgit moved between 4.2860 and 4.2960 against the US dollar, mainly influenced by Yallen's congressional testimony on Wednesday which did not sound as hawkish as many had anticipated.  

The local unit's performance was also supported by Malaysia's positive economic data released last Friday, which saw trade grew 31.5 per cent to RM153.3 billion in May 2017, up from the RM116.6 billion in the corresponding month a year ago.  

On a Friday-to-Friday basis, the ringgit traded higher at 4.2910/2940 against the greenback from 4.2970/3000 last week.

However, the local note traded mostly lower against other major currencies, except the euro.  

It depreciated versus the Singapore dollar to 3.1210/1243 from 3.1088/1123 last week, weakened against the Japanese yen to 3.7886/7926 from 3.7799/7829 and went down against the British pound to 5.5624/5667 from  5.5466/5522.  

The ringgit, however, appreciated against the euro to 4.8977/9016 from 4.9046/9085.


Money-Market: Steady Short-Term Rates Seen

KUALA LUMPUR -- Short-term rates are likely to remain steady next week with Bank Negara Malaysia (BNM) expected to offer tenders to absorb excess funds from the system.  

For the just-ended holiday-shortened week, the overnight rate was quoted at 2.96 per cent, while the one-, two- and three-week rates stood at 3.02 per cent, 3.06 and 3.11 per cent, respectively.  

The central bank intervened on a daily basis to mop up surplus liquidity by conducting range maturity auction tenders, Qard tenders, a Qard tender Islamic range maturity auction, a Commodity Murabahah Programme, a reverse repo tender, and conventional money market tenders.  

It also called for Qard money market tenders and conventional money market tenders.  

The total liquidity surplus for the week just ended declined to RM31.03 billion from RM35.26 billion in the conventional system on Friday, while in the Islamic system, it shed to RM5.51 billion from RM10.73 billion.  

The benchmark three-month interbank rate stood at 3.43 per cent.


KLCI Futures Contracts To Trade Higher

KUALA LUMPUR -- The FTSE Bursa Malaysia KLCI (FBM KLCI) futures contracts are expected to trend higher next week, tracking the performance of the underlying cash market, as well as positive global and domestic economic prospects.  

A dealer said the benchmark index was expected to test support level at 1,750.  

“Most daily oscillators are at oversold situation suggesting an oversold rebound should appear on a series of positive domestic catalyst. We should see slow buying interest continuing,” he told Bernama.  

On a Friday-to-Friday basis, spot month July 2017, August 2017 and December 2017 rose 0.5 of-a-point each to 1,759.5, 1,759.5 and 1,758.

Meanwhile, September 2017 was up one point to 1,759.5.  Turnover for the trading week rose to 22,316 lots from 21,141 lots previously, while open interest narrowed to 32,514 contracts from last week's 34,169 contracts.


CPO Futures Prices To Trade Higher

By Sharifah Pirdaus Syed Ali

KUALA LUMPUR -- The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to trade higher next week in anticipation of higher exports in the coming months, said a dealer.  

Phillip Futures Sdn Bhd Dealer David Ng said the export data to be released next week are expected to be positive following increased demands, particularly from China, which was gearing up for their seasonal buying and replenishing depleting stocks.

“Ahead of winter season, most importing countries would gear up to increase their stocks as the consumption is expected to increase, and we are seeing the trend from China and others as well.  

“We expect CPO prices to be traded between the range of RM2,540 and RM2,650 next week,” he told Bernama.  

Meanwhile, another dealer said the market would continue to monitor the performance of soyoil prices on the Chicago Board of Trade (CBOT) and Dalian Commodity Exchange, as well as the ringgit movement, which might influence trading patterns in the CPO market.  

For the week just ended, the Malaysian CPO futures market was traded in mixed style, tracking the performance of other edible oil on CBOT and Dalian Commodity Exchange, as well as concerns over rising palm oil production.  

On a Friday-to-Friday basis, spot month July 2017 slipped RM48 to RM2,620 a tonne,  August 2017 rose RM32 to RM2,637 a tonne, September 2017 added RM14 to RM2,568 a tonne and October 2017 gained RM23 to RM2,551 a tonne.  

Weekly turnover jumped to 217,042 lots from 188,610 lots last week, while open interest improved to 269,397 contracts from 253,521 contracts previously.  

On the physical market, July South shed RM32 to RM2,638 per tonne.


Rubber Market To Remain Mixed

By Sharifah Pirdaus Syed Ali

KUALA LUMPUR -- The Malaysian rubber market is expected to see mixed trading next week, tracking the performance of regional futures markets and fluctuation in crude oil prices, dealers said.  

The Malaysian rubber market also saw mixed trading this week, taking cue from the performance of the regional futures market, the Tokyo Commodity Exchange and Shanghai Futures Exchange, as well as the movements in crude oil prices.

Natural rubber (NR) prices has recovered gradually in June while a supply deficit remained in place, he said, citing the Association of Natural Rubber Producing Countries (ANRPC) report.  

The deficit in world supply of NR in June was close to 700,000 tonnes.  World production for the first half of this year was 5.73 million tonnes, up 5.8 per cent from 5.42 million tonnes in the first half of 2016 against world demand of 6.42 million tonnes for the same period, up 0.3 per cent from 6.4 million tonnes in the first half of 2016, the report said.  

He said the ANRPC also revised its outlook for world supply of natural rubber in 2017 to 12.80 million tonnes, while global demand was anticipated at 12.9 million tonnes.  

The market is expected to improve in the near-term in line with the positive outlook of the world’s NR supply and demand, as well as improving China’s economy and oil prices,” he said.

For the week just ended, rubber prices was mixed in line with the trend on TOCOM and SHFE.  

It was traded lower for the first two days, rebounded on Wednesday before remaining mixed towards the weekend.  

On a Friday-to-Friday basis, the Malaysian Rubber Board's official physical price for tyre-grade SMR 20 gained two sen to 623.5 sen a kg from 621.5 sen a kg, and latex-in-bulk decreased 21.5 sen to 499 sen a kg from 520.5 sen a kg.  

The 5 pm closing price for tyre-grade SMR 20 was 8.0 sen higher at 637.5 sen a kg from 629.5 sen a kg, but latex-in-bulk slipped 6.0 sen to 498 sen a kg from 504 sen a kg.


KLIBOR Futures Contract To Remain Quiet

KUALA LUMPUR -- The three-month Kuala Lumpur Interbank Offered Rate (KLIBOR) futures contract on Bursa Malaysia Derivatives is likely to remain quiet next week on a lack of catalysts.  

For the week just-ended, the market was untraded with open interest remaining at nil.  

On a Friday-to-Friday basis,  spot month July 2017, August 2017, September 2017 and December 2017 remained pegged at 96.54, 96.53, 96.52 and 96.47, respectively.  

The underlying three-month KLIBOR on the cash market was unchanged at 3.43 per cent on Friday.


KLTM To See Range-Bound Trading

By Rosemarie Khoo Mohd Sani

KUALA LUMPUR -- Tin price on the Kuala Lumpur Tin Market (KLTM) will likely see range-bound trading next week with the metal price moving between US$19,500 and US$20,100 a tonne.  

A dealer said the market would continue to be heavily influenced by the tin price on the London Metal Exchange (LME).  "We expect the metal price to see range-bound trading as demand may remain flat despite firm fundamentals with some market players would want to take a wait-and-see approach on their next move,” the dealer told Bernama.  

Throughout this week, the KLTM saw higher tin trading with prices ranging between US$19,900 and US$20,030 a tonne.  

On Friday, the tin price closed at US$19,900 a tonne, US$130 lower from US$20,030 a tonne on Friday last week.  

On the LME, the tin price also dropped US$145 to end at US$19,805 a tonne versus US$19,950 a tonne last week.  

Weekly volume on the KLTM remained unchanged at 166 tonnes from last week with Chinese, Japanese, South Korean, Taiwanese, Bangladeshi and Pakistani and local players dominating the bulk of the trade.  

The price differential between the KLTM and LME was at a premium of US$95 a tonne compared with a premium of US$80 a tonne last Friday.


Gold Futures To Trade On Cautious Note

KUALA LUMPUR -- Gold futures contracts on Bursa Malaysia Derivatives are likely to trade on a cautious note next week, tracking the performance of the US Commodity Exchange (Comex) gold futures.  

A dealer said US Federal Reserve Cahir Janet Yallen’s congressional testimony on Wednesday, which was deemed below expectations, might further hurt the Comex Gold next week, thus affecting the Bursa Malaysia gold futures contracts performance.  

"Yellen's comments sparked a significant decline in U.S. Treasury yields.

The Fed still appears to be in a position to continue hiking rates,” he said.

For the week just ended, the gold market traded mostly lower, mainly tracking the performance of the Comex gold.

The Comex Gold market was traded in a mixed tone due to cautious sentiment over Yallen’s congressional testimony, which did not sound as hawkish as many had anticipated.  

On a Friday-to-Friday basis, spot month July 2017 and August 2017 added seven ticks each to RM169.25 and RM169.85 a gramme, respectively, while September 2017 and October 2017 gained five ticks each to RM170.25 and RM171.10 a gramme, respectively.  

Weekly turnover for the week slipped to 68 lots worth RM1.76 million versus 83 lots worth RM1.41 million last week.  

Open interest on Friday was higher at 232 contracts from 227 contracts previously.