EDITION239 | Aug 11, 2018


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 Trending Higher On Foreign Buying

By Niam Seet Wei

KUALA LUMPUR -- Bursa Malaysia is likely to trend higher next week after recording gains over the past five consecutive weeks amid follow-through foreign buying.

Inter-Pacific Securities Sdn Bhd Head of Research Pong Teng Siew expected foreign investors would remain as the net buyers in the local equity market in the near term of a month or so, and continue to push the key index upwards.

"Therefore, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) is likely to trade between 1,823 and 1,890 next week on continuous buying by foreign investors," he told Bernama.

Pong viewed the foreign inflows as a cycle, especially after the international investors dumped nearly RM12 billion worth of local equities in early May this year.

"I view this as a transition period as foreign funds have consistently been the net buyers on Bursa Malaysia for the past three weeks," he said.

100-DAY REFORMS

Asked how the Pakatan Harapan (PH)-led government's first 100-day fiscal reforms would influence the local market especially with the Aug 17 deadline approaching, Pong said he did not see any residual impact on the local bourse currently.

"I do not think PH's 100-day manifesto would drive the local market at the moment, unless political decisions such as the cancellation of certain infrastructure or construction projects are made, just like what had happened previously, only then we can see the impact on related stocks.

"But that (situation) is over," he added.

For the week just-ended, Bursa Malaysia was traded mostly higher at between 1,777.78 and 1,812.69, mainly buoyed by continued foreign buying, but was capped by profit-taking on Friday.

The benchmark index breached the 1,800 psychological level to close at an intra-day high of 1,804.73 points on Wednesday with foreign funds snapping up RM229.6 million worth of local stocks, making it the largest inflow in a day for this month.

FRIDAY-TO-FRIDAY

On a Friday-to-Friday basis, the benchmark FTSE Bursa Malaysia KLCI was 25.66 points higher at 1,805.75 from 1,708.09 previously.

The FBM Emas Index advanced 170.01 points to 12,770.49 and the FBMT100 Index bagged 159.19 points to 12,546.84.

The FBM 70 put on 126.41 points to 15,588.78, the FBM Ace climbed 103.36 points to 5,549.40 and the FBM Emas Shariah Index was up 204.42 points to 12,948.88.

On a sectoral basis, the Finance Index perked up 135.72 points to 17,576.18, the Plantation Index improved 89.44 points to 7,712.83 but the Industrial Index was 6.77 points lower at 3,269.35.

MARKET TURNOVER

Weekly turnover widened to 11.93 billion units worth RM11.07 billion from 11.17 billion units valued at RM10.70 billion previously.

Main market volume rose to 7.52 billion shares worth RM9.99 billion compared with 6.65 billion shares valued at RM9.68 billion.

Warrants turnover, however, fell to 2.10 billion units worth RM509.46 million against 2.20 billion units valued at RM584.34 million.

The ACE market volume slipped to 2.29 billion shares worth RM573.79 million versus 2.31 billion shares valued at RM428.57 million.


Ringgit Expected To Weaken Versus US Dollar

By Mohd Khairi Idham Amran

KUALA LUMPUR -- The ringgit is likely to trend lower against the US dollar next week on continued downward pressure driven by external concerns, an analyst said.

FXTM Global Head of Currency Strategy and Market Research Jameel Ahmad said investors sentiment would likely be influenced by trade war concerns and geopolitical uncertainty.

He said this followed the US’ move to impose sanctions on Russia on accusation of using biochemical weapon after already re-imposing economic sanctions on Iran, while Turkey could be also be on the agenda of the US President Donald Trump administration.

"All of these factors combined do paint a picture that investors’ risk appetite could remain limited for some time," he told Bernama.

He said if these external factors continued to dominate market attention, the ringgit could weaken to RM4.10 against the greenback in the upcoming weeks as the local unit remained sensitive to these factors.

LACK OF CATALYST

For the week just-ended, the ringgit traded rangebound on lack of catalyst amid continuous tension on global trade.

The sentiment was further dampened by US sanctions of Russia on accusation of using biochemical weapon and re-introduction of sanctions on Iran.

On a Friday-to-Friday basis, the local note depreciated to 4.0830/0870 against the greenback from 4.0800/0850 in the preceding week.

Against other major currencies, the ringgit also decreased against the Singapore dollar to 2.9781/9813 from 2.9770/9813 and fell against the yen to 3.6800/6846 from 3.6523/6574.

The local unit rose against the British pound to 5.2193/2248 from 5.3064/3146 in the previous week and strengthened against the euro to 4.6779/6837 from 4.7222/7292.


Short-Term Rates To Remain Stable Next Week

KUALA LUMPUR -- Short-term rates are expected to remain stable next week with Bank Negara Malaysia (BNM) likely to offer tenders to reduce surplus 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-, 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 from the financial system by conducting tenders, including conventional money market, Qard, Islamic range maturity auction Qard and Bank Negara Interbank Bills.

On a Friday-to-Friday basis, the total liquidity surplus in the conventional system for the week was higher at RM24.94 billion from RM23.7 billion in the previous week, while in the Islamic system, it increased to RM11.98 billion versus RM10.81 billion previously.


KLCI Futures To Trade Higher Next Week

By Niam Seet Wei

KUALA LUMPUR -- The FTSE Bursa Malaysia KLCI (FBM KLCI) futures contract on the Bursa Malaysia Derivatives is expected to trade higher next week, tracking the firmer cash market, a dealer said.

Inter-Pacific Securities Sdn Bhd Head of Research Pong Teng Siew expected foreign investors to remain as the net buyers in the local equity market in the near term and continue to push the key index upwards.

"The benchmark FBM KLCI is likely to trade between 1,823 and 1,890 next week on continuous buying by foreign investors," he told Bernama.

On a Friday-to-Friday basis, August 2018 and September 2018 bagged 27 points each to 1,801.5 and 1,798.5, respectively, December 2018 advanced 26 points to 1,795.0 and distant month March 2019 added 23 points to 1,791.0.

Turnover for the week fell to 29,525 lots from 47,709 lots, while open interest narrowed to 27,255 contracts from 28,843 contracts previously.

The benchmark FBM KLCI was 25.66 points firmer at 1,805.75 from 1,780.09 in the previous week.


CPO Futures To Trend Higher Next Week

By Nurul Hanis Izmir

KUALA LUMPUR -- Crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is likely to trend higher next week on positive buying momentum following higher export figures reported by the Malaysian Palm Oil Board (MPOB) yesterday.

The MPOB said palm oil export increased 6.75 per cent to 1.205 million tonnes in July 2018 from 1.129 million tonnes in June.

For the first ten days of August, exports of Malaysian palm oil products rose 7.4 per cent to 298,610 tonnes from 278,048 tonnes shipped during July 1-10, according to an inspection company AmSpec Agri Malaysia.

"The news will likely boost the market, hopefully for next week onwards. Besides this, we also anticipate the weakening of the ringgit to support the CPO price," he told Bernama.

However, he did not discount the possibility of a slight drop in CPO prices mainly due to the escalating trade tensions between the US and China.

WEAKER RINGGIT

The CPO market was traded mostly higher last week, bolstered by a weaker ringgit and steady crude oil prices.

On a Friday-to-Friday basis, August 2018 increased RM36 to RM2,206 per tonne, September 2018 went up RM47 to RM2,225, October 2018 was RM46 higher at RM2,242, and November 2018 rose RM51 to RM2,275 per tonne.

Weekly turnover jumped to 267,723 lots from 204,191 lots last week, while open interest increased to 290,355 contracts versus 252,074 contracts.

On the physical market, August South was at RM2,220 per tonne, up by RM30 from last week's RM2,190 per tonne.


Rubber Market To Trade Higher Next Week

KUALA LUMPUR -- The Malaysian rubber market is expected to trade higher next week in line with the anticipated better performance on the regional rubber futures markets, a dealer said.

The commodity’s price is also likely to be boosted by the crude oil price movement and the ringgit performance, which is expected to weaken further, he added.

"Good news coming from Thailand will also provide a fillip to the local rubber market next week.

"The Thai government will pay planters to stop planting rubber in an effort to raise prices and this positive momentum will spillover to the local market," he added.

However, the escalating trade tensions between the US and China would negatively impact on the rubber market.

MARKET PERFORMANCE

For the week just-ended, rubber prices were traded mostly higher, taking the cue from external factors, including the regional markets performance, as well as the crude oil price and ringgit movements.

On a Friday-to-Friday basis, the Malaysian Rubber Board's noon price for tyre-grade SMR 20 rose 16.5 sen to 545.5 sen a kg, while latex-in-bulk remained at last week's 408.0 sen a kg.

The 5 pm unofficial closing price for SMR 20 gained 11.5 sen to 542 sen a kg, while latex-in-bulk stood at last week's 409.0 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 on trading interest.

The market was untraded throughout the week just-ended, with open interest and volume at nil.

On a Friday-to-Friday basis, settlement prices for August 2018, September 2018, October 2018 and December 2018 were all pegged at 96.27.

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


KLTM Likely To Be Lower Next Week

KUALA LUMPUR -- The Kuala Lumpur Tin Market (KLTM) is expected to trade lower next week on weaker demand for the commodity due to intensifying trade tensions between China and the United States.

A dealer said the weakness across the base metals reflected a reduced global risk-taking appetite amid the trade war between the world’s two largest economies.

"China has threatened to impose retaliatory tariffs on US$60 billion worth of US goods should the US impose a 25 per cent tariff on the second round of Chinese imports.

"From a technical viewpoint, we maintain our negative technical outlook over a one-month horizon," he added.

On a Friday-to-Friday basis, the KLTM price rose US$50 to US$19,650 a tonne, while turnover for the week decreased to 140 tonnes from 222 tonnes last week.

LME TIN PRICE

The tin price on the LME gained US$85 to US$19,690 a tonne.

Throughout the week, buying demand came mainly from China, South Korea, Japan, Taiwan, the United Kingdom and Germany.

The price differential between the KLTM and LME for the week just-ended stood at a discount of US$140 a tonne from a discount of US$5 a tonne last Friday.


Stronger US Dollar To Derail Gold Futures Prices

By Mohd Khairi Idham Amran

KUALA LUMPUR -- Gold futures contract on Bursa Malaysia Derivatives is expected to trade lower next week in tandem with the New York Commodity Exchange’s (Comex) gold market as the US dollar is likely to continue strengthening.

Phillip Futures Sdn Bhd Derivative Dealer Lee Pei Wan said the continued strengthening of the greenback would make gold bullion more expensive for holders of other currencies.

"Not many people will be interested to buy gold if the US dollar continues to strengthen," she told Bernama.

For the week just-ended, gold futures recorded its fifth consecutive weekly fall, tracking the Comex, derailed by the stronger US dollar.

Gold futures were untraded for three of the five trading days on lack of trading interest due to the stronger greenback.

On a Friday-to-Friday basis, August 2018 eased four ticks to RM159.50 a gramme, September 2018 lost eight ticks to RM159.50 a gramme, while October 2018 and November 2018 fell 10 ticks each to RM159.60 and RM160.40 a gramme respectively.

Weekly turnover fell to three lots valued at RM48,160 from seven lots valued at RM112,100 in the previous week, while open interest improved to 36 contracts from 33 contracts previously.