There are positive signs of recovery in the equities market especially, after Bursa Malaysia’s market capitalisation hit RM1 trillion last Tuesday, Bursa Malaysia’s chief executive officer Datuk Yusli Mohamed Yusoff said.

“It is a feat last achieved in 2007 before the global financial crisis,” he said at the a Market Chat 2009/2010 Roadshow on Saturday.

He said retail participation was also coming back – on the first day of trading this year retailers recorded an encouraging 34% (from some 20% 2009). “With the Government adopting an aggressive stance to make Malaysia a high-value economy, this would translate into a new era of growth for our economy,” he said.

Yusli said with such major transformation taking place, sectors of the economy that were deemed high value and high growth would see more economic activities.

“This will also have a positive impact on the Malaysian capital market and those who choose to participate,” he said.

Bursa Malaysia, he said, was serious in further developing the capital market. “While we make every effort to remain market friendly, you must also know that investor protection is a top priority for us. We remain focused on maintaining a regulatory framework that is effective without compromising market integrity,” he said.

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Although foreign funds are back in the country’s equities market amid the strengthening global and domestic economy, concerns over the political and social situation still exist, a forum was told on Saturday.

Maybank Investment Bank chief economist Suhaimi Ilias said foreign investors’ participation in Malaysia’s capital market was only 40% previously.

“(But) it is now increasing steadily,” he said at the Market Chat 2009/2010 Road Show.

Asia Alternative Asset Partners Ltd chief executive officer Paul Smith, however, cautioned that there were still concerns, especially about the political and social situation in the country.

He said increasing crime rate was one of them.

“Malaysia is competing with the rest of Asia. So, it has to make itself as attractive as possible as the draw for most international investors is currently North Asia rather than South-East Asia,” he said.

Smith said South-East Asia had become somewhat a backwater and the capital controls, imposed for many years now, had made it harder for international players to get back into the market in a substantial manner.

Geomatrix Group chief executive officer Robert Howe said in terms of hedging, there was a need for a futures market that has more than 5,000 contracts traded a day.

However, there had been a “slight improvement” in the KLCI futures market, he said.

Suhaimi said Maybank Investment expected the FTSE Bursa Malaysia Kuala Lumpur Composite Index to touch 1,410 level by end-2010.

Meanwhile, Suhaimi, in a research paper, said Malaysia’s real gross domestic product was expected to rebound by 4.5% in 2010.

“(This growth) is expected to be driven by the pick-up in consumer spending, recovery in exports and gross fixed-capital formation, as well as positive inventory adjustment, resulting in a broad-based growth in all economic sectors,” he said.

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Share prices on Bursa Malaysia edged higher on New Year’s Eve on Thursday. The FTSE Bursa Malaysia Composite Index (FBM KLCI) continued to stay above its critical support of 1,250 points when it closed at 1,272.78.

The FBM KLCI opened marginally higher at 1,263.53 before rebounding to close at the day’s high of 1,272.73 on Monday, giving a day-on-day gain of 8.79 points, or 0.70 per cent.

The benchmark index opened higher at 1,272.99 before rebounding to close at its day peak of 1,275.22 on Tuesday, giving a day-on-day gain of 2.49 points, or 0.20 per cent.

Overall market sentiment on Bursa Malaysia consolidated in step with rangebound activities on the regional stock markets on Wednesday. The FBM KLCI closed at 1,271.12, giving a day-on-day loss of 4.10 point, or 0.32 per cent.

A rebound on the Hong Kong stock market lifted share prices on Bursa Malaysia marginally higher on the eve of the New Year holidays. The FBM KLCI closed marginally higher at 1,272.78 on Thursday, giving a day-on-day gain of 1.66 points, or 0.13 per cent.

On the foreign front, the New York Stock Exchange’s Dow Jones Industrial Average continued to stay above its major psychological support of 10,000 points. The Dow closed at 10,428.05 on Thursday, giving a four-day loss of 92.05 points, or 0.87 per cent.

The tech stock heavy Nasdaq Composite Index continued to stay above its critical support of 2,200 when it closed at 2,269.15, giving a four-day loss of 16.54 points, or 0.72 per cent.

The Tokyo stock market, meanwhile, continued to stay above its major psychological support on Wednesday. The Nikkei 225 Index closed at 10,546.44 points, giving a three-day gain of 51.73 points, or 0.49 per cent.

In Hong Kong, the stock market staged a follow-through rebound on Thursday. The Hang Seng Index closed at 21,872.50, posting a four-day gain of 355.50 points, or 1.65 per cent.

On Bursa Malaysia, the FBM KLCI posted a week-on-week increase of 8.84 points, or 0.70 per cent.

The following are the readings of some of the FBM KLCI’s technical indicators:

Moving Averages: The FBM KLCI continued to stay above its 10-,20-, 30-, 50-, 100- and 200-day moving averages.

Momentum Index: Its short-term momentum index stayed above the support of its neutral reference line.

On Balance Volume: Its short-term OBV trend stayed above the support of its 10-day exponential moving averages.

Relative Strength Index: Its 14-day RSI stood at the 56.81 per cent level on Thursday.

Outlook

The FBM KLCI rebounded from its intra-year low of 836.51 on March 12 2009 to its intra-year high of 1,288.42 on November 17 2009, giving an intra-year trading range of 451.91 points.

The continuing rebounds on the regional stock markets lifted market sentiment on Bursa Malaysia. The FBMKLCI notched a year-on-year gain of 396.03 points, or 45.17 per cent, when compared to its closing of 876.75 on December 31 2008.

Against the backdrop of global gloom and credit crunch, heavyweight blue chips led the market recovery, giving a total market capitalisation of RM999.4 billion on December 31 2009, recording a gain of 50.6 per cent over its market capitalisation of RM663.8 billion on December 31 2008. Its gain of 50.56 per cent had managed to outperform the FBM KLCI’s year-on-year gain of 45.17 per cent.

As it turned out, the FBM KLCI’s year-on-year gain of 45.17 points ranked second from the bottom of the performance list of Asia-Pacific stock markets. The Nikkei 225 Index was last on the table with 19.04 per cent. Sri Lanka’s Colombo All Share Index was the best performing market with a year-on-year gain of 125.25 per cent while the rest of the stock markets (except Tokyo and Bursa Malaysia) recorded year-on-year gains exceeding 50 per cent.

China’s Shenzhen Composite Index, with a year-on-year jump of 117.12 per cent, ranked as the second best performing market in the region. The Jakarta Composite Index and India’s BSE Sensex 30 Index were third and fourth with year-on-year gains of 86.98 and 81.0 per cent respectively.

The FBM KLCI’s 30 components replaced the KLCI’s 100 components on July 6, rising from 1,065.83 points to close at 1,272.78 on December 31 2009, posting a gain of 206.95 points, or 19.42 per cent.

MMC Corp, CIMB, AMMB and Genting posted year-on-year gains of 133.65, 119.49, 102.43 and 98.38 per cent respectively. They contributed enormously to the FBM KLCI’s 19.42 per cent in the second half of 2009. In fact, 23 of the FBM KLCI’s 30 components were in the exclusive RM10 billion (market capitalisation) club.

The FBM KLCI’s weekly chart continued to stay below the support of its intermediate-term uptrend (See FBM KLCI’s weekly chart A3:A4) at the market close on Thursday. It continued to stay above the neckline (A1:A2) of its head-and-shoulders pattern formation.

Chartwise, the FBM KLCI’s daily trend continued to stay below the lower support (See FBM KLCI’s daily chart B3:B4) of its intermediate-term uptrend channel (B3:B4 and B5:B6) on Thursday. Also, the FBM KLCI continued to stay above the neckline (B1:B2) of its head-and-shoulders pattern formation.

The benchmark index’s daily and monthly fast Moving Average Convergence Divergence indicators (MACDs) stayed above their respective slow MACDs on Thursday. Its weekly fast MACD continued to stay above its weekly slow MACD.

The FBM KLCI’s 14-day RSI stayed at 56.81 per cent level on Thursday. Its 14-week and 14-month Relative Strength Index stayed at 70.41 and 64.12 per cent levels respectively.

Last week, this column commented that institutional investors’ year-end window-dressing exercise was over and done with. The next four days were likely to see to rangebound trading on lack of fresh market leads. It did. The FBM KLCI trended within a range of 11.95 points (1,263.34-1,275.29 levels).

Overall market sentiment will remain upbeat in the first half of 2010. With that, the FBM KLCI is likely to edge closer to its overhead resistance zone (1,350 to 1,450). However, the FBM KLCI is likely to experience choppy movements during the second half of 2010. Its immediate downside support for the year is likely to be around 1,100 to 1,200.

Next week, the FBM KLCI’s envisaged resistance zone hovers at 1,277 to 1,311 while its immediate downside support is at 1,235 to 1,269.

The subject expressed above is based purely on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.

from:btimes.com.my/Current_News/BTIMES/articles/tek2/Article/