EDITION 189 | Nov 18, 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: Strong 3Q GDP To Boost Sentiment On Bursa Malaysia

By Niam Seet Wei

KUALA LUMPUR -- Bursa Malaysia is expected to trade firmer next week, taking the cue from the encouraging gross domestic product (GDP) data released last Friday. 

Affin Hwang Investment Bank Vice-President/Head of Retail Research Datuk Dr Nazri Khan Adam Khan said the 6.2 per cent GDP growth, deemed as the strongest growth over the past three years, would boost investors’ appetite on the local bourse. 

"The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) would likely touch the 1,740 points level next week," he told Bernama. 

Bank Negara Malaysia said, in a statement, that given the continued strong performance in 3Q17, Malaysia's economy was on course to register close to the upper range of the official projection of 5.2 to 5.7 per cent in 2017, supported by domestic demand.

Meanwhile, Nazri Khan said traditionally, the local market benchmark would trend higher beginning from November to February due to some window-dressing activities. 

"Furthermore, the Bandar Malaysia project, which the government was widely anticipated to award  later this year, would serve as a big catalyst for the local market," he said. 

It was reported that all agreements related to the mega project would likely be signed before the general election, due in 2018.  On a weekly basis, the benchmark FBM KLCI, however, fell 20.62 points to 1,721.66 from 1,742.28 last Friday. 

The FBM Emas Index declined 164.57 points to 12,416.92, the FBMT 100 Index shed 155.41 points to 12,063.28, the FBM Emas Shariah Index dipped 351.86 points to 12,857.86 and the FBM 70 was 237.72 points weaker at 15,311.15 but the FBM Ace surged 762.86 points to 6,591.58. 

On a sectoral basis, the Finance Index lost 178.35 points to 16,051.37, the Plantation Index erased 107.48 points to 7,908.53 and the Industrial Index fell 63.78 points to 3,137.97. 

Total turnover narrowed to 12.87 billion units, valued at RM11.83 billion, from 14.82 billion units, worth RM11.36 billion, recorded last Friday. 

Main Market volume fell to 8.33 billion shares, worth RM10.98 billion, from 9.34 billion shares, valued at RM10.50 billion, registered previously. 

Warrants’ turnover eased slightly to 1.20 billion shares, worth RM144.62 million,  versus last week’s 1.21 billion shares worth RM117.88 million. 

The ACE Market weakened to 3.28 billion units, valued at RM686.84 million, against 4.18 billion units, valued at RM698.21 million,  transacted previously.


FOREX: GDP Growth To Support Ringgit's Trading Next Week

KUALA LUMPUR -- The ringgit is expected to continue its upward momentum against the US dollar next week, propelled by Malaysia's third quarter gross domestic product growth as well as the possibility of the central bank revising the overnight policy rate (OPR). 

The Malaysian economy grew at a faster pace of 6.2 per cent in the Q3, 2017 compared with 4.3 per cent recorded in the same quarter last year. 

Affin Hwang Investment Bank Vice-President and Head of Retail Research Datuk Dr Nazri Khan Adam Khan said the ringgit might hover around 4.10 against the greenback next week due to positive domestic factors. 

Most analysts and economists are projecting the central bank to revise the OPR in the first quarter of next year. 

On a Friday-to-Friday basis, the ringgit had strengthened 300 basis points to 4.1600/1630 against the greenback from 4.1900/1930 last Friday. 

Against other major currencies, the ringgit was traded. 

It rose against the Singapore dollar to 3.0656/0685 from 3.0804/0835 but eased against the British pound to 5.5120/5168 from 5.5099/5155 last Friday. 

It depreciated versus the Japanese yen to 3.6961/6998 from 3.6952/6988 and depreciated vis-a-vis the euro to 4.9055/9103 from 4.8855/8899, previously.


Short-Term Rates To Remain Stable Next Week

KUALA LUMPUR -- Short-term rates are expected to remain stable next week with Bank Negara Malaysia likely to intervene by offering tenders to absorb surplus liquidity from the system. 

For the week just-ended, the overnight rate was quoted at 2.97 per cent, while the one-, two- and three-week rates stood at 3.02 per cent, 3.06 per cent and 3.11 per cent, respectively. 

The central bank intervened on a daily basis to mop up excess liquidity by conducting conventional money market tenders, Qard tenders and range-maturity auction money market tenders. 

The total liquidity surplus in the conventional system for the week just-ended narrowed to RM25.95 billion from RM29.02 billion last week. In the Islamic system, it rose to RM10.3 billion from RM8.06 billion previously. 

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


FBM KLCI Futures To Trend Higher Next Week

KUALA LUMPUR -- The FTSE Bursa Malaysia KLCI (FBM KLCI) futures contract is expected to trend higher next week, tracking the strong performance of the underlying cash market. 

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) would likely to touch 1,740 points next week. 

"The local bourse is expected to be propelled by the third quarter gross domestic product growth of 6.2 per cent, year-on-year," he told Bernama. 

In a statement on Friday, Bank Negara Malaysia said given the continued strong performance in 3Q17, Malaysia's economy was on course to register close to the upper range of the official projection of 5.2 to 5.7 per cent in 2017, supported by domestic demand. 

For the week just-ended, the futures market rebounded to end the week on a positive note after trading lower for four consecutive days, in line with the cash market. 

On a week-to-week basis, November 2017 slid 23.5 points to 1,715.0, December 2017 and June 2018 gave up 25.5 points each to 1,712.0 and 1,711.0, respectively, and March 2018 was 27 points lower at 1,714.0. 

Weekly turnover, however, advanced to 26,130 lots from 20,297 lots last Friday while open interest rose to 32,091 contracts from 28,006 contracts previously. 

On Friday, the FBM KLCI ended 3.55 points better at 1,721.66.


CPO Futures To Trade With Downward Bias

By Sharifah Pirdaus Syed Ali

KUALA LUMPUR -- Crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to trade between RM2,500 and RM2,600 per tonne next week, with a downward bias, said a dealer. 

Interband Group of Companies Senior Palm Oil Trader Jim Teh said CPO prices would see range trading on the back of rising inventories. 

"However, the lower price could attract physical buyers to clear some of their inventories,” he told Bernama. 

The Malaysian Palm Oil Board reported that Malaysia's palm oil stocks for October rose 8.4 per cent to 2.19 million tonnes from 2.02 million tonnes in September. 

Meanwhile, Phillip Futures Sdn Bhd Derivatives Dealer David Ng said CPO futures was expected to see thin trading next week on lack of positive catalysts. 

“A stronger ringgit might also curb short-term demand and push inventories higher,” he added. 

On a Friday-to-Friday basis, November 2017 decreased RM60 to RM2,680 per tonne while December 2017, January 2018 and February 2018 dropped RM83 each to RM2,696, RM2714 and RM2,728 per tonne, respectively. 

Weekly turnover increased to  215,054 lots from 213,990 lots last Friday while open interest narrowed to 289,139 contracts from 298,895 contracts, previously. 

On the physical market, November South was RM90 easier at RM2,690 per tonne.


Rubber Market To Trend Lower Next Week

By Sharifah Pirdaus Syed Ali

KUALA LUMPUR -- The Malaysian rubber market is likely to trade lower next week, amid oversupply concerns and a slowing Chinese economy, a dealer said. 

The benchmark Tokyo Commodity Exchange (TOCOM) rubber futures hit its lowest level, in nearly five months, on Thursday taking the cue from the extended losses in Shanghai futures. 

“Bearish sentiment in Shanghai rubber futures were influenced by weaker commodity prices especially in copper and other industrial metals, as data earlier this week showed Chinese industrial output and fixed asset investment growth had slowed in October,” he said. 

The uncertainties in regional futures market coupled with a stronger ringgit against US dollar would continue to set the tone for the rubber futures market,” he told Bernama. 

However, the ongoing wet weather, which affected rubber output, coupled with the La Nina phenomenon from November 2017 to January 2018 would limit losses, he added. 

Expectation that major world crude oil producers will extend a supply-cut deal, later this month, would also support rubber prices. 

On a Friday-to-Friday basis, the Malaysian Rubber Board's noon price for tyre-grade SMR 20 decreased 17.5 sen to 565.0 sen a kg while latex-in-bulk fell 13.5 sen to 467 sen a kg. 

The 5 pm unofficial closing price for SMR 20 dropped 19 sen to 569.0 sen a kg and latex-in-bulk slipped 10.0 sen to 467.0 sen a kg.


KLIBOR Futures To Remain Quiet Next Week

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

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

On a Friday-to-Friday basis,  both December 2017 and January 2018 stood at 96.50, respectively, February 2018 remained at 96.48 and March 2018 was pegged at 96.45. 

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


KLTM Likely To Be Flat Next Week

KUALA LUMPUR -- The Kuala Lumpur Tin Market (KLTM) is expected to be flat next week on a lack of fresh leads, a dealer said.

“We expect the metal price to move between US$19,300 and US$19,500 a tonne next week,” he said, adding the KLTM would also be influenced by the metal’s performance on the benchmark London Metal Exchange (LME). 

On a Friday-to-Friday basis, the tin price on the KLTM fell US$131 to US$19,399 per tonne from US$19,530 per tonne last week, while on the LME, it eased US$55 to end at US$19,375 a tonne from US$19,430 a tonne last week. 

Turnover declined to 160 tonnes from 233 tonnes last week. 

The differential between the KLTM and LME on Friday was at a premium of US$24 a tonne from US$100 a tonne previously.


Gold Futures To Move Within Tight Band Next Week

By Harizah Hanim Mohamed

KUALA LUMPUR -- The gold futures contract on Bursa Malaysia Derivatives is expected to be on the uptrend next week in range-bound trading. 

Phillip Futures Sdn Bhd Dealer Amberlyn How said the stronger ringgit might influence demand for local gold, however, the impact would be very minimal compared with external factors. 

“Jitters over the US probe of possible Russian interference in 2016 election sent the dollar index marginally lower, which indirectly impacted the US Commodity Exchange’s (COMEX) gold futures market on Friday,” she said. 

For the week just-ended, gold futures contract on Bursa Malaysia traded lower. 

On a Friday-to-Friday basis, November 2017 and December 2017 shed 42 ticks each to RM172.6 a gramme, respectively, while January 2018 and February 2018 fell 34 ticks to RM173.5 and RM174, respectively. 

Weekly turnover improved to 46 lots, worth RM794,120, from last week's 15 lots valued at RM261,760. 

Open interest on Friday rose to 99 contracts from 90 contracts previously.