Why is Bursa Malaysia expected to consolidate with an upward bias next week?

Question

Accepted Answer

Bursa Malaysia Expected to Consolidate Upward Due to Glove Counter Bargain-Hunting

Bursa Malaysia is anticipated to continue its consolidation phase with an upward tendency in the upcoming week, driven by sustained bargain-hunting activities in glove manufacturing stocks. This trend follows a period where these counters, specifically Top Glove and Hartalega, experienced significant selling pressure and became oversold. The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) is projected to trade within the range of 1,500 to 1,530 points.
Continued Bargain-Hunting in Oversold Glove Stocks

The primary catalyst for the expected upward consolidation is the prolonged bargain-hunting in glove counters. Stocks such as Top Glove and Hartalega were heavily sold off in the preceding week due to substantial profit-taking. This oversold condition is creating an environment where investors are likely to step in to purchase these shares at lower prices, thereby supporting the market.
Market Correction to Stabilise Performance

The current market movement is viewed as a healthy correction necessary for stabilising the trading environment. Following a phase of being overbought with exceptionally high trading volumes, a period of consolidation is essential to cool down the market. This adjustment aims to prevent overheating and ensure a more sustainable trajectory for the FBM KLCI, which had previously reached a 10-year low on March 19.
Extended Consolidation Influenced by External Factors

The consolidation mode is forecasted to extend into the following month, influenced by two significant upcoming events. These include the Sabah state election scheduled for September 26 and FTSE Russell's decision on Malaysia's inclusion in the World Government Bond Index (WGBI) later in the month. These factors are currently clouding investor sentiment and contributing to market uncertainty.
Previous Week's Performance and Index Movement

In the week prior, the FBM KLCI traded sideways, closing at 1,504.85 points, a decrease from the previous week's 1,515.86. This movement was largely attributed to profit-taking in glove stocks, which briefly pushed the index below the 1,500 psychological level. However, bargain-hunting emerged towards the end of the week, lifting the barometer.

Reading history

Hide →

This history is cleared when the page is closed.

Why is Bursa Malaysia expected to consolidate with an upward bias next week?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

1

0

0

Share with friends