EDITION 203 | March 17, 2018


Market Outlook


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 Likely To See Range-Bound Trading

By Azlee Nor Mahmud

KUALA LUMPUR -- Bursa Malaysia will likely see range-bound trading next week with a downside bias, driven by global geopolitcal uncertainties and hindered trade amid hiccups in US President Donald Trump’s administration, dealers said. 

FXTM Research Analyst, Lukman  Otunuga, said with reports the US was seeking to impose tariffs on Chinese imports likely to weigh heavily on sentiment, Wall Street remained vulnerable to further losses. 

Meanwhile, PublicInvest Research also said the downbeat finish on Wall Street the past week had also followed unconfirmed reports that US Special Counsel, Robert Mueller, had issued a subpoena for documents related to the Trump Organisation. 

Kenanga Research, in a note, said the outlook for the index remained seemingly weak in the short term as key indicators continued to be indecisive, coupled with tepid trading volumes. 

The research firm said key support would be at 1,840-level and a lower support at 1,800-level. 

On a  Friday-to-Friday basis, the FBM KLCI was 2.47 points better at 1,846.39 from 1,843.92 previously. 

The FBM Emas Index rose 64.7 points to 13,033.64, FBMT100 Index increased by 70.88 points to 12,782.07 and the FBM Emas Shariah Index surged by 97.66 points to 13,220.17. 

The FBM 70 improved 270.22 points to 15,693.49. The FBM Ace decreased 46.85 points to 5,925.01. 

On a sectoral basis, the Industrial Index was up 88.87 points to 3,270.73 and the Finance Index advanced 45.44 points to 18,038.18. The Plantation Index declined 87.66 points to 8,044.16. 

Weekly turnover fell to 12.44 billion units worth RM13.19 billion from 12.94 billion units worth RM12.43 billion. 

Main market volume rose to 8.12 billion shares valued at RM12.49 billion from 7.77 billion shares valued at RM11.62 billion. 

Warrant turnover decreased to 1.88 billion units worth RM274.1 million from 2.35 billion units worth RM354.6 million. 

The ACE market fell to 2.40 billion shares valued at RM419.23 million from 2.80 billion shares valued at RM435.93 million.

FOREX: Ringgit To Trade Higher Against Greenback

KUALA LUMPUR -- The weakening sentiment for the US dollar will likely help to boost the demand for the ringgit next week, to trade between 3.88-3.92 against the greenback, a dealer said.  He said mounting concerns over the political turmoil in the US, including President Donald Trump's decision to replace the National Security Advisor, H.R. McMaster and to fire the Secretary of State, Rex Tillerson, had negatively weighed on interest for the safe-haven currency. 

"This will help boost sentiment for other currencies, especially the emerging market currencies. 

“Nevertheless, fears of a potential trade war would likely reduce the appetite globally,”  he told Bernama. 

Earlier this week, Trump had announced that the country would impose tariff on up to US$60 billion (US$1 = RM3.92) of Chinese imports, specifically targeting the technology and telecommunications sectors. 

The White House said the move was to pressure China into cutting its trade surplus with the US by US$100 billion. 

On a Friday-to-Friday basis, the local note finished firmer against the greenback at 3.9070/9120 from 3.9100/9140 the previous week. 

The ringgit had started the week higher, spurred by upbeat local economic reports and weaker performance of the greenback. 

Worries over increased protectionism under the Trump administration had muted risk appetite globally, including for the ringgit, thus pushing the currency to retreat. 

However, the local unit rebounded following the emergence of fresh political concerns at the White House. 

Meanwhile, the ringgit was traded mostly lower against a basket of major currencies.  It fell against the Singapore dollar to 2.9761/9810 from 2.9653/9694 last Friday and declined against the yen to 3.6953/6010 from 3.6610/6662 last week. 

The ringgit depreciated against the euro to 4.8138/8215 from 4.8093/8158 last Friday and weakened vis-a-vis the British pound to 5.4565/4643 from 5.3997/3060 previously.

Short-Term Rates To Remain Steady Next Week

KUALA LUMPUR -- Short-term rates are expected to remain steady next week with Bank Negara Malaysia’s (BNM) continued operations to mop up excess funds from the financial system. 

The central bank would operate on a daily basis by conducting monetary instruments, including conventional money market, Qard, repo and reverse repo tenders. 

On Friday, the average overnight interest rate stood at 3.19 per cent, while the one-, two- and three-week rates were pegged at 3.26 per cent, 3.30 per cent and 3.35 per cent respectively. 

The total liquidity surplus in the conventional system for the week decreased to RM21.98 billion from RM27 billion last week, while in the Islamic system, it eased to RM9.08 billion from RM10.21 billion. 

The benchmark three-month Kuala Lumpur Interbank Offered Rates remained at last week's 3.69 per cent.

KLCI Futures To Trend Higher Next Week

By Azlee Nor Mahmud

KUALA LUMPUR -- The FTSE Bursa Malaysia KLCI  futures contract (FKLI) is expected to be higher next week on the back of improved performance of the underlying cash market. 

RHB Research said it maintained its near-term positive sentiment as the index was still trading above the recent low of the 1,830-point support. 

It said overall, the market was expected to rise further if the immediate 1,875-point resistance was taken out decisively in the coming sessions. 

The research firm advised traders to maintain long position, given that it had initially recommended it above the 1,860.50-point level on March 13. 

On a Friday-to-Friday basis, spot month March 2018 and June 2018 eased 1.5 points each to 1,840 and 1,835.5, respectively. 

April 2018 added 0.5 of-a-point to 1,840.5. September 2018 was two points lower at 1,834. 

Turnover for the week decreased to 26,540 lots from 22,201 lots last Friday while open interest rose to 33,902 contracts from 27,335 contracts. 

The benchmark FBM KLCI finished 1.12 points stronger at 1,846.39 from 1,843.92 last Friday.

CPO Futures Contract To See Range-Bound Trading

By Siti Noor Afera Abu

KUALA LUMPUR -- Crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is likely to see range-bound trading next week with prices between RM2,400 per tonne and RM2,430 a tonne. 

Interband Group of Companies Senior Trader, Jim Teh, said the market was likely to remain quite as traders would stay on the sidelines amid the election fever. 

“We have no complaints about the price for the time being with inventories in Malaysia and Indonesia being quite high," he told Bernama. 

According to the Malaysian Palm Oil Board (MPOB), the country's total palm oil stocks in February 2018 slipped 2.85 per cent to 2.48 million tonnes against 2.55 million tonnes in January. 

On a Friday-to-Friday basis, March 2018 added RM57 to RM2,455 per tonne, April 2018 gained RM60 to RM2,445 per tonne, May 2018 rose RM65 to RM2,441 and June 2018 advanced RM58 to RM2,434 per tonne. 

Weekly turnover increased to 261,743 lots from 213,670 lots last Friday, while open interest dropped by 278,913 contracts from 312,786 contracts last week. 

On the physical market, March South was RM40 higher at RM2,440 per tonne.

Rubber Market To Trade Mixed Next Week

KUALA LUMPUR -- The Malaysian rubber market is likely to see mixed trading next week, tracking the ringgit’s movements against the US dollar and global crude oil prices, a dealer said. 

He said the rubber prices would also move in tandem with prices of other commodities and regional futures markets, namely the Tokyo Commodity Exchange and Shanghai Futures Exchange. 

According to the Department of Statistics, natural rubber production fell by two per cent in January 2018 to 65,792 tonnes from 67,101 tonnes in the previous month. 

The stocks rose by 10.5 per cent to 254,525 tonnes at the end of January compared to 230,300 tonnes in the preceding month. 

For the week just-ended, rubber prices were mostly mixed on lack of catalysts. 

On a Friday-to-Friday basis, the Malaysian Rubber Board's noon price for tyre-grade SMR 20 gained six sen to 565.5 sen a kg, while latex-in-bulk was 29 sen lower at 470.0 sen a kg. 

The 5pm unofficial closing price for SMR 20 increased 2.5 sen to 564.5 sen a kg, and latex-in-bulk lost 18.5 sen to 472.5 sen a kg.

Quiet KLIBOR Futures Trading Seen

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 at nil.  On a Friday-to-Friday basis, settlement prices for March 2018, April 2018, May 2018 and June 2018 stood at 96.32, 96.30, 96.29 and 96.27 respectively. 

The underlying three-month KLIBOR was unchanged from last week's 3.69 per cent.

KLTM Likely To Be On Downtrend Next Week

KUALA LUMPUR -- The Kuala Lumpur Tin Market (KLTM) is expected to be on a downtrend next week, moving between US$19,900 and US$21,200 (US$1 = RM3.92) on lack of catalysts for the commodity, said a dealer. 

“The demand is there, but most buyers are cautious about buying, as they need more time to digest the consequences of US President Donald Trump’s decision to impose steel and aluminium import tariffs,” he said. 

He said the KLTM would also closely track the performance on the London Metal Exchange (LME), the trendsetter for tin. 

On a Friday-to-Friday basis, KLTM price was US$300 lower at US$21,050 per tonne from US$21,350 per tonne last week. 

On the LME, tin price fell by US$525 to end at US$21,025 a tonne from US$21,550 a tonne previously. 

Turnover eased to 159 tonnes from 202 tonnes recorded last week. 

Meanwhile, on the price differential between the KLTM and LME, the latter was at a premium of US$25 per tonne from a discount of US$200 per tonne last week.

Gold Futures Contract To See Cautious Trading

KUALA LUMPUR -- Gold futures contract on Bursa Malaysia Derivatives is likely to see cautious trading next week, with prices staying at the current levels.  Phillip Futures Sdn Bhd Dealer, Tan Sek Wei, said demand for the precious metal would be influenced by the US Commodity Exchange's gold market's performance, which was closely linked to the US dollar's movements and developments in the US. 

“The gold price is likely to remain range-bound ahead of the Federal Open Market Committee meeting which will be held on March 21,” he told Bernama.  It was reported that the US Federal Reserve would raise interest rates at its meeting. 

On a Friday-to-Friday basis, March 2018 rose four ticks to RM166.80 a gramme, but April 2018, May 2018, June 2018 declined two ticks each to RM167.05, RM167.80 and RM167.80, respectively. 

Weekly turnover fell to 23 lots worth RM349,310 from last week's 15 lots valued at RM249,000, while open interest widened to 79 contracts from 70 contracts previously.