EDITION 206 | April 14, 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 To See Slightly Better Trading Next Week

By Zairina Zainudin

KUALA LUMPUR -- Bursa Malaysia is expected to trade slightly better next week with investors accumulating selected index-linked counter stocks, amid cautious sentiment which is largely to be influenced by external developments. 

A dealer said the current bullish sentiment, spurred by an easing of the US-China trade war tensions and a threatened military strike by the US on Syria not imminent, would continue to fuel risk appetite next week. 

“In addition, US President Donald Trump reconsidering rejoining the Trans-Pacific Partnership free-trade deal has sparked relief in the face of the China trade threat. 

“Wall Street’s performance will be closely monitored with confidence seeming to pile up ahead of the US corporate earnings season,” he told Bernama. 

On the local front, another dealer said an upside bias in small and mid-cap stocks is expected to continue next week. 

He anticipated reports on Malaysia's unemployment figures and inflation data to be released next week, would partly contribute to market sentiment. 

On a Friday-to-Friday basis, the FBM KLCI was 31.46 points higher at 1,868.47 from 1,837.01 last week. 

The key index moved on an upward momentum and ended almost at a four-year high on Thursday before retreating on Friday as profit taking emerged. 

The FBM Emas Index surged 353.26 points to 13,129.52, the FBM Emas Shariah Index soared 459 points to 13,352.7 and the FBMT100 Index increased 300.72 points to 12,921.62. 

The FBM 70 jumped 651.67 points to 15,819.58 and the FBM Ace climbed 607.13 points to 5,646.13. 

On a sectoral basis, the Finance Index chalked up 292.91 points to 18,261.84, the Plantation Index improved 137.78 points to 8,054.53 and the Industrial Index rose 22.48 points to 3,220.98. 

Weekly turnover expanded to 16.59 billion units worth RM12.55 billion from 12.49 billion units valued at RM10.68 billion. 

Main market volume surged to 10.17 billion units worth RM11.57 billion from 7.23 billion units valued at RM9.36 billion. 

Warrants turnover increased to 3.42 billion units worth RM449.85 million from 1.3 billion units valued at RM945.69 million. 

The ACE market volume widened to 2.97 billion shares worth RM529.98 million from 2.23 billion shares valued at RM363.88 million.

Ringgit's Trajectory Next Week To Be Influenced By Economic Data

By Azlee Nor Mahmud

KUALA LUMPUR -- The ringgit’s trajectory next week is expected to be influenced by Malaysia’s economic data, as well as US interest rates. 

Both are slated for released next week, dealers said. 

FXTM Research Analyst, Lukman Otunuga, said with the dollar likely to remain supported by expectations of faster US interest rate hikes this year, emerging market currencies including the ringgit, may feel the heat. 

“While a resurgent greenback has the ability to punish the ringgit, optimism surrounding the Malaysian economy could limit downside losses,” he told Bernama. 

Meanwhile, Otunuga said the upcoming trading week will offer investors a fresh insight into the health of Malaysia’s economy, with both unemployment figures and inflation data being released. 

Much attention will be directed towards the inflation figures for any signs of consumer prices moving towards Bank Negara Malaysia’s projected two to three per cent inflation target for 2018, said Otunuga. 

He said with the World Bank raising its forecast of Malaysia’s economic growth to 5.4 per cent this year, the ringgit has scope to appreciate further. 

On a Friday-to-Friday basis, the local note finished easier against the greenback at 3.8785/8815 from 3.8680/8720 last week. 

The ringgit traded lower against a basket of major currencies. 

It trimmed against the Singapore dollar to 2.9573/9603 versus 2.9345/9387 last Friday, and fell against the yen to 3.6042/6080 from 3.6035/6076. 

The ringgit declined vis-a-vis the British pound to 5.5393/5451 from 5.4195/4266 and depreciated against the euro to 4.7837/7878 from 4.7352/7413.

Short-Term Rates To Remain Steady Next Week

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

The central bank would operate on a daily basis to conduct conventional money market, Qard, Commodity Murabahah Programme, repo tenders and Islamic range maturity auction. 

On Friday, the average overnight interest rate stood 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. 

The total liquidity surplus in the conventional system for the week decreased to RM20.9 billion from RM24.17 billion last week, while in the Islamic system, it eased to RM8.19 billion from RM14.14 billion. 

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

KLCI Futures To Trend Higher Next Week

KUALA LUMPUR -- The FTSE Bursa Malaysia KLCI futures contract (FKLI) is expected to trend higher next week, tracking the anticipated slightly better movement of the underlying cash market, a dealer said. 

He said sentiment in the futures market last week, which was influenced by positive external developments, might continue next week, prompting investors to accumulate position. 

On a Friday-to-Friday basis, April 2018 rose 33.5 points to 1,871, May 2018 increased 35 points to 1,867, June 2018 edged up 32 points to 1,863.5 and September 2018 improved 30.5 points to 1,860.5. 

Turnover for the week declined to 29,060 lots from the 37,492 lots recorded last week, while open interest narrowed to 30,334 contracts from 34,495 contracts previously. 

The benchmark FBM KLCI ended the week 31.46 points stronger at 1,868.47 from 1,837.01.

CPO Futures Contract To See Mixed Trading Next Week

By Sharifah Pirdaus Syed Ali

KUALA LUMPUR -- The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to be mixed next week, on similarly mixed sentiment surrounding the market. 

Interband Group of Companies Senior Trader, Jim Teh, said the market would likely be traded between RM2,350 and RM2,450 a tonne. 

He said the decline in the Malaysian stockpile and expectations of higher demand for palm oil, particularly from Muslim countries as the fasting month approaches in May, is expected to support the price. 

“It will also further reduce the stockpile, while the expectation of rising production due to good weather in the coming weeks, would cap the gains,” he added. 

On Tuesday, the Malaysian Palm Oil Board (MPOB) announced that Malaysia's total palm oil stocks in March 2018 fell by 6.24 per cent to 2.32 million tonnes from 2.48 million tonnes in February. 

CPO production increased to 1.57 million tonnes month-on-month from 1.34 million tonnes previously. 

Teh said market players are also expected to be more focused on the forthcoming 14th General Elections. 

Meanwhile, the MPOB also has announced the reintroduction of the crude palm oil export tax which was set at five per cent for May, after four months of being suspended. 

Phillip Futures Sdn Bhd Derivative Product Specialist, David Ng said the tax would affect demand with the price of the commodity being higher. 

"For next week, the market will watch closely the export data from cargo surveyor Intertek Testing Services to be released on Monday, for further market direction," he added. 

For the week just-ended, the market was mostly lower on anticipation of rising production and weaker export. 

On a Friday-to-Friday basis, April 2018 fell RM87 to RM2,392 per tonne, May 2018 slipped RM117 to RM2,392 per tonne, June 2018 declined RM106 to RM2,399 and July 2018 shed  RM98 to RM2,401 per tonne. 

Weekly turnover fell to 209,078 lots from 589,683 lots, while open interest reduced to 270,126 contracts from 282,667 contracts. 

On the physical market, April South was RM80 lower at RM2,420 per tonne.

Stable Malaysian Rubber Market Projected Next Week

By Sharifah Pirdaus Syed Ali

KUALA LUMPUR -- The Malaysian rubber market is likely to be stable next week on on expectations of steady demand for the commodity in the coming months, said a dealer. 

He said the positive sentiment brought on by a recent report on the favourable supply-demand situation for natural rubber (NR) is expected to continue supporting the price of the commodity. 

The Association of Natural Rubber Producing Countries (ANRPC) on April 12, reported that global demand for NR grew 7.6 per cent to 3.361 million tonnes in the first quarter of this year, from 3.123 million tonnes in the same quarter of 2017. 

During the same reference period, the global supply of NR posted a 3.3 per cent growth at 3.152 million tonnes on a year-to-year basis. 

"The firmer global oil prices will eventually increase the price of synthetic rubber which would also be positive for NR," he told Bernama. 

He said rubber prices would also move in tandem with those of other commodities, as well as regional futures markets like the Tokyo Commodity Exchange (TOCOM) and Shanghai Futures Exchange. 

"The movement of the futures markets will take into account among others, the uncertain outlook following trade tensions between China and the US, worries of rising inventories in the futures market and currencies movement," he added. 

For the week just-ended, the market traded mostly mixed in tracking the mixed signals from regional rubber futures markets, as well as crude oil price movements. 

On a Friday-to-Friday basis, the Malaysian Rubber Board's noon price for tyre-grade SMR 20 rose 19 sen to 534 sen a kg from 515 sen kg last week, and latex-in-bulk eased 2.5 sen to 450.5 sen a kg from 453 sen a kg. 

The 5 pm unofficial closing price for SMR 20 increased 15.5 sen to 531.5 sen a kg from 516 sen a kg, and latex-in-bulk was 7.5 sen lower at 447.5 sen a kg from 455.0 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 stay quiet next week on a lack of market catalysts. 

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

On a Friday-to-Friday basis, settlement prices for spot month April 2018, May 2018, June 2018 and September 2018 stood at 96.30, 96.29, 96.27 and 96.27 respectively. 

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

KLTM To Trade Around US$21,000 A Tonne Next Week

KUALA LUMPUR -- The Kuala Lumpur Tin Market (KLTM) is expected to trade around the current level of US$21,000 a tonne next week as traders remain cautious on external developments, dealers said. 

A dealer said traders are expected to adopt a “wait-and-see” approach towards the impact of US tariffs on products from China, as well as economic sanctions against Russia. 

“These, coupled with the latest developments in Syria, have put metal prices in general on a volatile mode,” he added. 

For the week-just-ended, the KLTM was mostly lower on bearish sentiment, amid worrying external developments. 

On a Friday-to-Friday basis, the KLTM price was US$20 lower at US$20,980 a tonne from US$21,000 per tonne last week. 

On the LME, the tin price fell US$175 to end at US$20,900 a tonne from US$21,075 a tonne previously. 

Turnover increased to 188 tonnes from 177 tonnes last week. 

Meanwhile, the price differential between the KLTM and LME stood at a premium of US$80 per tonne compared with a discount of US$75 per tonne last week.

Gold Futures Contracts To Be Range Bound Next Week

KUALA LUMPUR -- Trading in the gold futures contract on Bursa Malaysia Derivatives is expected to be range bound next week with an upside bias, dealers said. 

RHB Research Institute was optimistic and said it was best to stay in long positions, given that the bullish bias is still there. 

The research house said the New York Commodity Exchange (Comex) Gold declined US$18.10 to US$1,341.90 yesterday. 

“However, there is no change to our positive view, as we think the commodity is merely taking a breather, as this is a normal reaction after the Comex gold price increased consecutively in the prior four sessions and hit its newest two-week high on April 11. 

“As long as no firm downside development is in sight, the bulls remain in control of market sentiment,” it added. 

On a Friday-to-Friday basis, April 2018 rose to RM167.60 per gramme, while May 2018, June 2018, July 2018 rose 38 ticks each to RM167.90 per gramme respectively. 

Weekly turnover rose to 25 lots worth RM385,200 from last week's 16 lots worth RM266,610, while open interest widened to 67 contracts from 65 contracts.