EDITION 157 | March 25, 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 Likely To Inch Higher Towards 1,780

By Farhana Poniman

KUALA LUMPUR -- Bursa Malaysia is likely to trend higher next week, with the benchmark index inching towards the 1,780-level, supported by positive local economic news and the return of calmness after the sharp drop on Wall Street early last week.  

Affin Hwang Investment Bank Vice-President and Head of Retail Research, Datuk Dr Nazri Khan Adam Khan, said FTSE Bursa Malaysia KLCI (FBM KLCI) maintained its bullishness and stayed in higher territory as equity bulls remained largely unfazed by the increases in the US interest rate.

"For the year-to-date, FBM KLCI recorded a total gain of 116 points, or 7.1 per cent, signalling more resilience and upside in the near term despite imminent Federal Reserve rate increases and doubts on US President Donald Trump's fiscal reforms," he told Bernama.  

On the local news, he said, Prime Minister Datuk Seri Najib Tun Razak's statement that Malaysia gross domestic product would be higher than 4.2 per cent this year should be supportive for market sentiment.  Nazri said this showed that the economy was growing more than double the rates the International Monetary Fund had predicted for advanced economies while showing that Malaysia was firmly on the path to become a high-income nation.  

Weekly turnover surged to 22.23 billion units worth RM15.24 billion from 19.39 billion units worth RM17.22 billion last week.  Main Market volume narrowed to 14.74 billion shares valued at RM15.16 billion from 15.10 billion shares valued at RM16.53 billion previously.


FOREX: Ringgit To Trade Firmer Against US Dollar

By Sharifah Pirdaus Syed Ali

KUALA LUMPUR -- The ringgit is likely to trade firmer against the US dollar next week on an improved Malaysian economy, dealers said.  Affin Hwang Investment Bank Vice-President/Head of Retail Research, Datuk Dr Nazri Khan Adam Khan, said the ringgit was expected to strengthen with the retracement of the US dollar and the recovery of the commodities.

"With the improved commodity prices, weaker dollar, as well as better projection of Malaysian economic growth, the ringgit, which has been stable over the last three weeks, should now test the RM4.30/US dollar threshold.  

"Any further weakness, especially if the ringgit trend towards the RM4.50/US dollar psychological barrier, as part of its commitment, Bank Negara Malaysia (BNM) will likely step in to defend the currency against exchange rate volatility via open market operations," he said.  

The fact that the Malaysian inflation (CPI February 2017, 4.5 per cent) remained at an eight-year high (since November 2008) was also likely to lead towards hawkish BNM policy and contribute towards higher ringgit, he told Bernama.  

Meanwhile, Hong Leong Research said, the ringgit has advanced 0.2 per cent week-on-week to 4.4295 against the greenback and climbed against the currencies of six of the Group of 10 countries.  

On technical outlook, it said, the US dollar appeared to be improving but only very gradually and remained prone to declines.

"Unless the US dollar closes below 4.4230, the immediate direction will likely be up and would target 4.4376–4.4414. Upside break of 4.4427 accelerates the bulls," it added.  

For the week just-edded, the ringgit moved between 4.4230 and 4.4270 against the US dollar.  On a Friday-to-Friday basis, the ringgit was traded higher at 4.4230/4280 against the greenback at 4.4340/4370.  

Against other major currencies, the local note finished mostly lower except the Singapore dollar.  It weakened against the yen to 3.9789/9845 from 3.9156/9196 last Friday; declined against the euro at 4.7777/7849 from 4.7767/7818; and, against the British pound, it slipped to 5.5248/5328 from 5.4933/4983.  

The ringgit improved against the Singapore dollar to 3.1600/1651 from 3.1638/1682 last week.


Money Market To Remain Stable

KUALA LUMPUR -- The money market is expected to remain stable next week on Bank Negara Malaysia's (BNM) intervention to mop up surplus liquidity from the financial system.  

The central bank is expected to conduct daily tenders to reduce excess liquidity from the financial market.  

For the week just-ended, BNM intervened on a daily basis to absorb excess funds by conducting several tenders, including conventional money market, Qard, reverse repo and repo.  

On Friday, the central bank's action helped reduce the market's total liquidity surplus to RM30.48 billion in the conventional system and RM7.14 billion in Islamic funds.  

The overnight Islamic reference rate stood at 2.96 per cent and the one-, two- and three-week rates stood at 3.02 per cent, 3.06 per cent and 3.11 per cent, respectively.  

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


KLCI Futures To Trend Higher Next Week

By Farhana Poniman

KUALA LUMPUR -- The FTSE Bursa Malaysia KLCI (FBM KLCI) futures contracts will likely trend higher next week, mirroring the anticipated bullish performance of the underlying cash market.  

Affin Hwang Investment Bank Vice-President and Head of Retail Research, Datuk Dr Nazri Khan Adam Khan, said the FTSE Bursa Malaysia KLCI (FBM KLCI) was expected to inch higher towards the 1,780-level next week.  

"The FBM KLCI will be supported by positive local economic news and the return of calmness after the sharp drop on Wall Street early last week," he told Bernama.  

Nazri said the FBM KLCI maintained its bullishness into higher territory, recording a total gain of 116 points or 7.1 per cent year-to-date, as equity bulls remained largely unfazed by hikes in the US interest rate.  

Meanwhile, he said, Prime Minister Datuk Seri Najib Tun Razak's statement saying that Malaysia gross domestic product would be higher than 4.2 per cent this year, would also lift market sentiment.  

"This shows that the economy was growing more than double the rates the International Monetary Fund had predicted for advanced economies while showing that Malaysia was firmly on the path to become a high-income nation," he added.  

On a Friday-to-Friday basis, March 2017 gained 26 points to 1,748, April 2017 rose 28.5 points to 1,751.5, June 2017 was up 29.5 points to 1,750 and September 2017 added 31.5 points to 1,748.  

Turnover for the week was marginally lower at 34,152 lots from 34,915 lots recorded last Friday while open interest widened to 42,676 contracts from 40,586 contracts.  The benchmark FBM KLCI ended the week 0.55 of-a-point higher at 1,745.75 from 1,745.20 last Friday. 


CPO Prices To Trade At Current Level Of Between RM2,700 And RM2,800 A Tonne

KUALA LUMPUR -- Crude palm oil (CPO) futures contracts on Bursa Malaysia Derivatives are likely to trade at the current level of between RM2,700 and RM2,800 a tonne next week, said a dealer.  

Interband Group of Companies Senior Palm Oil Trader, Jim Teh, said market participants were waiting for fresh leads to steer the market.  

Another dealer said palm oil would continue to move in tandem with soyaoil on the Chicago Board of Trade next week where both would be competing for the same export destinations.  

On a Friday-to-Friday basis, spot month April 2017 fell RM71 to RM2,895 a tonne, May 2017 went down RM48 to RM2,825 a tonne, June 2017 was RM49 lower at RM2,754 a tonne and July 2017 eased RM50 to RM2,695 a tonne.  

Weekly turnover was lower at 229,228 lots from 303,520 lots last Friday, while open interest rose to 243,810 contracts from 233,529 contracts in the previous week.  

On the physical market, April South declined RM60 to RM2,980 a tonne from the previous week.  


Rubber Market To Trend Lower Next Week

KUALA LUMPUR -- The Malaysian rubber market is likely to trend lower next week on lack of fresh leads, said a dealer.  

The dealer said most traders would watch closely the movements of rubber futures on the Tokyo Commodity Exchange (TOCOM) to gauge the trend throughout the week.  

For the week just-ended, the market was traded mostly lower in tandem with TOCOM as well as ringgit and crude oil movements.

On a Friday-to-Friday basis, the Malaysian Rubber Board’s noon price for SMR 20 fell by 60 sen to 829.0 sen a kg, while latex-in-bulk eased 17 sen to 708.0 sen a kg.  

The 5 pm unofficial closing price for SMR 20 decreased 68.0 sen to 823.0 sen a kg, while latex-in-bulk fell 18.5 sen to 706.0 sen a kg. 


KLIBOR Futures To Remain Quiet Next Week

KUALA LUMPUR -- The three-month Kuala Lumpur Interbank Offered Rate (KLIBOR) futures contracts on Bursa Malaysia Derivatives are likely to remain quiet next week.  

A dealer said this will due to the absence of market catalysts.  

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

On a Friday-to-Friday basis, April 2017 stayed at 96.53, May 2017 was unchanged at 96.52, June 2017 remained pegged at 96.50 and September 2017 stood at 96.46.  

The underlying three-month KLIBOR on the cash market remained at 3.42 per cent on Friday.


KLTM Prices To Move Between US$19,800 And US$21,200 Per Tonne

KUALA LUMPUR -- The prices on Kuala Lumpur Tin Market (KLTM) are expected to move between US$19,800 and US$21,000 per tonne next week, supported by overseas demand, said a dealer.  

He said the Chinese, Korean, Japanese and Taiwanese traders were expected to help sustain the prices as the sellers would be reluctant to sell below these levels.  

The dealer also said the KLTM would continue to be heavily influenced by the tin price on the London Metal Exchange (LME).  

For the week just-ended, the KLTM price surged to US$20,380 per tonne compared with US$20,050 per tonne last Friday.  

It was mainly supported by buyers from China, South Korea, Japan, Taiwan, Pakistan and European countries.  Weekly turnover fell to 177 lots from 195 lots last week, while the price differential between the KLTM and the LME was at a discount of US$80 a tonne against a discount of US$110 a tonne last Friday. 

 


Gold Futures Likely To See Uncertain Trading Next Week

By Sharifah Pirdaus Syed Ali

KUALA LUMPUR -- Gold futures contracts on Bursa Malaysia Derivatives are expected to see uncertain trading next week, tracking the US Commodity Exchange's (COMEX) gold market.  

Phillip Futures Sdn Bhd Dealer, Amberlyn How, said the market players will be taking the cues from the outcome of the US President Donald Trump's healthcare reform vote for further cues on market direction.  

"The vote is viewed as an indicator of Trump's ability to impose his economic and political agenda.  

"Failure to push through the healthcare reform will create uncertainties in the market and will be a potential drive to prompt more investors to gold as safe haven assets," she told Bernama.  

For the week just-ended, Bursa Malaysia Derivatives gold was traded mostly higher before ending the week lower tracking the COMEX's performance which was driven by the weaker US dollar.  

The greenback was under pressure following a more dovish-than-expected monetary policy from the Federal Reserve.  

On a Friday-to-Friday basis, March 2017 rose 27 ticks to RM176.3 a gramme, April 2017 gained 25 ticks to RM175.85 a gramme, May 2017 added six ticks to RM175.9 a gramme and June 2017 improved four ticks to RM176 a gramme.  

Turnover for the week rose to 103 lots worth RM1.82 million from 24 lots worth RM434,900 last week.  

Open interest on Friday was lower at 294 contracts compared with 332 contracts previously.