EDITION 212 | June 09, 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's Downtrend Likely To Continue Next Week

KUALA LUMPUR -- Bursa Malaysia will likely continue its downtrend next week on gloomy investor sentiment, as well as profit-taking ahead of the Hari Raya holiday, said analysts. 

An analyst told Bernama that the macro factors expected to affect the FTSE Bursa Malaysia KLCI next week, includes the Group of Seven(G7) meeting as investors search for clues on the trade outlook, as well as the timing of the next interest rate hike by the US Federal Reserve (Fed) which meets on June 12. 

"Investors believe any move will have a spillover effect on emerging markets like Malaysia and likely turn interest away from the equity market. 

"Due to the volatile market sentiment, the local benchmark index is likely to trade sideways in testing the 1,730 and 1,740 support levels over the next weekly session,” he said. 

Another analyst said the market's performance will also depend on the ringgit's movement against the US dollar, as well as, that of global oil prices. 

“The current downtrend in oil prices is not only due to growing supply, but also an indication by Saudi Arabia and other big producers to increase output,” she told Bernama. 

On a Friday-to-Friday basis, the benchmark FTSE Bursa Malaysia KLCI was 21.94 points higher at 1,778.32 from 1,756.38. 

The FBM Emas Index increased 237.17 points to 12,473.07, the FBMT100 Index rose 216.60 points to 12,270.56, the FBM 70 gained 486.20 points to 14,928.36 and the FBM Emas Shariah Index improved 245.39 points to 12,465.60. 

The FBM Ace advanced 245.85 points to 5,295.40. 

On a sectoral basis, the Finance Index rose 260.87 points to 17,877.90 and the Industrial Index went up 37.36 points to 3,202.18.

But, the Plantation Index fell 39.29 points to 7,660.97. 

Weekly turnover widened to 16.16 billion units worth RM14.38 billion from 13.32 billion units worth RM18.79 billion. 

Main market volume increased to 10.38 billion shares worth RM12.86 billion from 9.08 billion shares worth RM18.13 billion. 

Warrants turnover improved to 3.33 billion units valued at RM790.33 million versus 2.85 billion units valued at RM464.73 million. 

The ACE market volume improved to 2.45 billion shares worth RM537.69 million from 1.38 billion shares worth RM200.66 million.

FOREX: Ringgit To Ride On External Factors

By Mohd Khairi Idham Amran 

KUALA LUMPUR -- The ringgit is expected to be influenced by external factors next week with major events happening in the monetary and geopolitical space, a dealer said. 

OANDA Head of Trading in Asia-Pacific Stephen Innes said the market would be buckling up for a busy week ahead from the US central bank policy meeting to one of the most geopolitically essential summits, the Trump-Kim summit, in Singapore. 

“The market is going in with a positive vibe, but which makes the tail risk that much more significant, if talks collapse,” he told Bernama. 

He said investors would also monitor the development of trade talks from the Group of Seven (G7) and ongoing US-China trade negotiations, as well as outcome from the US Federal Reserve (Fed) and European Central Bank’s (ECB) meetings. 

Innes said the Fed is widely expected to announce an interest rate hike next Wednesday, but investors would be keeping to forward guidance, for clues as to whether it could raise rates a fourth time this year. 

“The market will also be watching the ECB’s meeting as it is widely expected that the removal of quantitative easing would be discussed. 

“Next week is massive. I expect the current range to hold, but with the USD/MYR to gravitate to the top side of the spectrum, exposing a possible move through 4.00 (ringgit vis-à-vis US dollar) if the Trump-Kim summit fails and either the ECB or the Fed are more hawkish than expected,” he added. 

Meanwhile, FXTM Global Head of Currency Strategy and Market Research Jameel Ahmad said locally, investors would be monitoring the retail sales figures to be released on Tuesday. 

“The retail sales data is seen as a crucial indicator of consumer sentiment and a stronger than expected reading would help improve optimism that the Malaysian economy can expand above five per cent in 2018. 

“The current forecast is that retail sales should have increased by around eight per cent in April,” he added. 

On a Friday-to-Friday basis, the local note eased against the greenback to 3.9870/9900 from 3.9770/9800. 

It declined against the Singapore dollar to 2.9836/9881 from 2.9728/9761 and depreciated against the yen to 3.6468/6505 from 3.6393/6430. 

The local note weakened vis-a-vis the British pound to 5.3482/3534 from 5.2902/2946 and decreased against the euro to 4.6903/6946 from 4.6551/6594. 

MONEY-MARKET: Short-Term Rates To Remain Stable

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

For the week just-ended, the average overnight interest rate remained at 3.19 per cent, while the one-week, two and three-week rates were pegged at 3.26 per cent, 3.30 per cent and 3.35 per cent respectively. 

Meanwhile, the benchmark three-month Kuala Lumpur Interbank Offered Rate was at last week’s 3.69 per cent. 

During the week, the central bank intervened on a daily basis to absorb excess liquidity by conducting tenders such as a conventional money market, Qard, range maturity auction, Commodity Murabahah Programme, reverse repo tender, as well as Bank Negara Interbank Bills. 

On Friday-to-Friday basis, the total liquidity surplus in the conventional system for the week was slightly higher at RM29.13 billion from RM26.52 billion last week, while in the Islamic system, it declined to RM11.45 billion from RM14.52 billion.

KLCI Futures Expected To Trade Lower Next Week

By Nurunnasihah Ahmad Rashid 

KUALA LUMPUR -- The FTSE Bursa Malaysia KLCI (FBM KLCI) futures contract on Bursa Malaysia Derivatives will likely be on a downtrend next week, tracking the weaker performance of the underlying cash market. 

An analyst told Bernama that the futures prices might also start on a weak note next week if Wall Street continued its downtrend. 

He said investors are likely to stay on the sidelines on continued concerns over external factors, including the outcome of the G7 (Group of Seven) meeting for clues on the trade outlook, as well as the timing of the next interest rate hike by the US Federal Reserve (Fed) which meets on June 12. 

"Investors are reluctant to take heavy positions following the lack of catalysts that can actually boost their confidence in the market,” he added. 

For the week just-ended, the FBM KLCI futures contract traded mixed in tracking the performance of the underlying cash market. 

On a Friday-to-Friday basis, June 2018 and July 2018 rose 27 points each to 1,775.0 and 1,774.5 respectively, while September 2018 added 29.5 points to 1,776.0 and December 2018 bagged 25.5 points to 1,770.0. 

Turnover for the week fell to 45,971 lots from 105,219 lots last week, while open interest declined to 38,770 contracts from 38,954 contracts. 

The benchmark FBM KLCI fell 7.49 points to end the week at 1,778.32.

CPO To See Profit-Taking Next Week

By Niam Seet Wei

KUALA LUMPUR -- The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is likely to see profit-taking next week during the Hari Raya holiday-shortened trading period. 

Interband Group of Companies Senior Trader Jim Teh said the profit-taking might pull down the CPO prices to between RM2,300 and RM2,350 per tonne next week. 

"Furthermore, we expect next week to be a quite trading week, as many traders might start their Hari Raya holiday and be away from their desks on Thursday, the eve of Aidilfitri," he told Bernama. 

However, Teh noted that investors would keep a close watch on the official production and export data to be released by the Malaysian Palm Oil Board on Monday (June 11). 

"The statistics will provide a clearer investment direction for them," he added. 

For the week just-ended, the market traded lower, mainly due to lacklustre demand, concerns over weak exports and in tracking the rival soybean oil movement. 

On a Friday-to-Friday basis, June 2018 fell RM58 to RM2,378 a tonne, July 2018 slipped RM67 to RM2,369 a tonne, August 2018 declined RM73 to RM2,366 a tonne and September 2018 dropped RM70 to RM2,368 a tonne. 

Weekly turnover advanced to 209,023 lots from 130,376 lots last week, while open interest widened to 302,853 contracts from 263,107 contracts. 

On the physical market, June South was RM65 lower at RM2,380 per tonne.

Rubber Market Likely To See Uptrend Next Week

By Niam Seet Wei

KUALA LUMPUR -- The Malaysian rubber market is likely to see an upswing next week, driven by expectations of firmer crude oil prices and a softer ringgit, alongside encouraging economic data from China. 

A dealer said concerns over Venezuela's struggle to meet its crude oil supply obligations and the unlikelihood of the Organisation of the Petroleum Exporting Countries raising production at its meeting this month, might also help buoy rubber prices next week. 

"Typically, the natural rubber price will move in line with crude oil prices.Higher crude oil prices make  the crude-oil-based synthetic rubber costlier, and hence, encourages a shift in demand to natural rubber," he told Bernama. 

Meanwhile, the dealer said the ringgit, which is expected to trend lower against the US dollar due to the possibility of another interest rate increase by the Federal Reserve next week, would also support the rubber price. 

On the impact of firmer Chinese economic data, he said the statistics indicate that demand for rubber might improve, especially from the tyre-manufacturing segment. 

China’s official customs data released on Friday showed that its May yuan-denominated exports rose 3.2 per cent from a year earlier, while yuan- denominated imports rose 15.6 per cent year-on-year, resulting in a trade surplus of 156.51 billion yuan (RM97.36 billion). 

"It was also reported that the resilience of global demand is expected to continue driving earnings for the rubber glove sector," said the dealer. 

For the week just-ended, the rubber market traded mostly mixed in tracking the mixed signals from regional rubber futures markets and concerns over global trade tensions, especially between the US and China. 

Nevertheless, losses were capped by the firmer crude oil prices, along with a softer ringgit versus the greenback. 

On a Friday-to-Friday basis, the Malaysian Rubber Board's noon price for tyre-grade SMR 20 eased 2.5 sen to 556.0 sen per kg from 558.5 sen per kg last week, while latex-in-bulk dropped 31.5 sen to 441.0 sen per kg from 472.5 sen per kg. 

The 5 pm unofficial closing price for SMR 20 trimmed half-a-sen to 558.0 sen per kg from 558.5 sen a kg, while latex-in-bulk lost 23.5 sen to 443.0 sen from 466.5 sen a kg.

KLIBOR Futures To Be Traded At Current Levels Next Week

KUALA LUMPUR -- The three-month Kuala Lumpur Interbank Offered Rate (KLIBOR) futures contract on Bursa Malaysia Derivatives is likely to be traded at the current levels next week. 

For the week just-ended, the market was untraded for the whole week, while open interest and volume remained nil throughout the week. 

On a Friday-to-Friday basis, settlement prices for June 2018, July 2018, August 2018 and September 2018, all remained pegged at 96.27. 

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

KLTM To Trade Slightly Higher Next Week

KUALA LUMPUR -- The Kuala Lumpur Tin Market (KLTM) is expected to trade slightly higher next week at between US$20,900 and US$21,000, supported by local buying, a dealer said. 

He said the tin price would likely be influenced by the performance of the metal on the benchmark London Metal Exchange (LME). 

“The tin price will also take cue from other metal-based commodities like zinc, nickel and copper, which were firm and on an upside momentum,” he added. 

For the week just-ended, the KLTM was mostly higher in tracking a similar performance on the LME. 

On a Friday-to-Friday basis, the KLTM price rose by US$320 to US$21,000 a tonne, lifted by higher demand, while tracking the LME’s performance. 

On the LME, the tin price increased US$725 to US$21,325 per tonne from US$20,600 a tonne last week. 

Turnover for the week increased to 281 tonnes from  237 tonnes. 

The price differential between the KLTM and LME for the week just-ended was at a discount of US$325 per tonne from a premium of US$80 per tonne last week.

Gold Futures To See Volatile Trade Next Week

By Mohd Khairi Idham Amran

KUALA LUMPUR -- Gold futures contracts on Bursa Malaysia Derivatives could see volatile trade next week, influenced by the US Federal Reserve (Fed) meeting, a dealer said. 

Phillip Futures Sdn Bhd dealer Tee Guy Eon said gold prices are expected to trade sideways ahead of a decision on interest rates by the Fed and which is set to be announced on Thursday at 2 am Malaysian Time. 

“After the announcement, a trend could be expected as prices break out from their range in either direction,” he told Bernama. 

On a Friday-to-Friday basis, June 2018, July 2018, August 2018 and September 2018 fell 21 ticks each to RM166.10, RM166.45, RM166.55 and RM166.60 respectively. 

Weekly turnover declined to four lots worth RM33,310 from 10 lots worth RM167,170 in the previous week, while open interest was lower at 35 contracts from 36 contracts.