BURSA MALAYSIA SET TO TREND HIGHER NEXT WEEK

By Siti Radziah Hamzah

KUALA LUMPUR, Sept 21 (Bernama) -- Bursa Malaysia is anticipated to trend higher next week, buoyed by optimism following the US Federal Reserve’s (Fed) substantial interest rate cut.

Stephen Innes, managing partner at SPI Asset Management, stated that the Fed's decision has strengthened investor confidence in the ringgit and granted Bank Negara Malaysia (BNM) the much-needed flexibility in its policy framework.

Innes noted that BNM, previously cautious about cutting rates due to concerns over currency depreciation, now has the green light to do so.

"Just knowing that optionality is there is a boost in itself. Lower rates would undoubtedly be a win for growth and equity valuations, and with the ringgit appreciating significantly, the odds of a BNM 'insurance cut' are rising," he told Bernama.

Innes also emphasised that government support for Malaysia's tech sector is crucial in attracting foreign investments.

"Judging by the currency’s movement, foreign investors are already starting to find their way back into the Malaysian market. 

"All signs point to a positive trend, and these flows could create a virtuous circle for both currency and local markets," he said.

Innes was cautiously optimistic that Bursa Malaysia's benchmark index would stay above 1,660 points next week, despite potential risks from the US elections.

"Increased tariffs could negatively affect China. Even though Malaysia will not be in the line of tariff fire, Asia's risk could turn slightly negative," he added.

UOB Kay Hian Wealth Advisors head of investment research Mohd Sedek Jantan predicted that the benchmark index would retest the 1,670 resistance level next week, following several attempts to breach this level during Friday's trading.

He noted that the positive outlook is further supported by the Fed's recent rate cut and a global trend towards monetary easing, which is expected to accelerate by year-end.

Mohd Sedek added that Wall Street’s performance continues to influence global markets, including Malaysia.

He noted that, historically, lower interest rates have favoured equities, with sectors such as housing, automotive, and financials benefiting from reduced borrowing costs over the next 12 months.

"This could also sustain strong consumer spending, and we expect Wall Street's positive momentum to spill over into emerging markets like Malaysia," he added.

Bursa Malaysia was closed on Monday this week in observance of Prophet Muhammad’s birthday and the Malaysia Day public holiday.

The local bourse traded mostly higher during the week, driven by a buying rush in glove counters after the US announced plans to increase tariffs on medical gloves from China to 50 per cent in 2025 and 100 per cent in 2026.

The Fed’s oversized half-point rate cut also contributed to the bullish sentiment.

On a Friday-to-Friday basis, the FBM KLCI rose 16.67 points to 1,668.82, compared to 1,652.15 the previous week.

Across Bursa Malaysia’s index board, the FBM Emas Index surged 236.44 points to 12,538.75, the FBMT 100 Index climbed 214.91 points to 12,231.21, and the FBM Emas Shariah Index gained 296.66 points to 12,412.47.

The FBM 70 Index advanced 660.02 points to 17,941.90, while the FBM ACE Index added 118.59 points to 5,202.83.

In terms of sectors, the Financial Services Index rose 137.71 points to 19,688.81, the Plantation Index fell 4.08 points to 7,176.65, the Industrial Products and Services Index gained 3.69 points to 178.84, and the Energy Index climbed 13.91 points to 876.72.

For the week, turnover decreased to 13.67 billion units worth RM16.15 billion, compared to 38.74 billion units valued at RM16.65 billion in the previous week.

The Main Market’s volume eased to 8.37 billion shares worth RM15.22 billion, down from 8.78 billion shares worth RM15.57 billion the prior week.

Warrant turnover dropped to 3.69 billion units worth RM403.07 million from 4.10 billion units valued at RM1.20 billion the week before.

The ACE Market’s volume fell to 1.60 billion shares worth RM519.71 million, compared to 1.88 billion shares worth RM606.15 million previously.

-- BERNAMA