Malaysia's stock market to stay strong

MALAYSIA'S stock market is expected to hold quite well in the next few months due to numerous activities such as the recent initial public offerings (IPOs), which had drawn strong interest from investors.

The IPOs include those of Felda Global Holdings Bhd and Asia's largest healthcare operator, IHH Group.

Bursa Malaysia chief executive officer Datuk Tajuddin Atan said the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) is expected to stay strong amid some positive signs in the US and European markets.

"In the latest employment data released in the US, the rate of employment and unemployment have increased at the same time. While this is a positive sign, overall, the market is still cautious.

"But from a Malaysian perspective, I think, overall, the market is moving quite well. The index is going up due to the good IPOs and investors' activities," Tajuddin told Business Times in a phone interview recently.

 

TA Securites head of research Kaladher Govindan had said in his Business Times column last week that a further upside could be seen for the FBM KLCI due to strong rally in US and European stocks, thanks to better-than-expected US employment data for July, which indicated sustainable economic growth.

He said further upside should be in store for the local market this week.

However, confirmation by way of strong buying momentum will be needed to sustain a breakout to new highs, otherwise profit-taking and selling will likely cap gains in the immediate term.

For this week, however, analysts said share prices on Bursa Malaysia are expected to move sideways due to uncertainty and lack of positive news flow.

Global stocks could see further losses following the failure of the US Federal Reserve and European Central Bank to adopt monetary stimulus measures.

On the local front, continuous rotation out of small-cap stocks into big-cap ones since June is expected to push FBM KLCI higher.

The benchmark index is currently trying to shake off a five-day sideways consolidation range of between 1,620 and 1,635 levels.

Some key headlines that are likely to spur good market play next week include Eastern & Oriental Bhd's RM1 billion condominium launch, SapuraKencana bagging more Australian oil commissioning job, F&N's potential beverage tie-up with Coca-Cola and speculative properties play from the launch of Tun Razak Exchange.