KLCI edges up cautiously ahead of Bank Negara interest rate decision

KLCI edges up cautiously ahead of Bank Negara interest rate decision
-A +A

KUALA LUMPUR (Jan 20): The main index at Bursa Malaysia edged up cautiously in early trade Wednesday, ahead of Malaysia’s first interest-rate decision of the year when Bank Negara Malaysia’s (BNM) monetary policy committee meets later in the day.

At 9.05am, the FBM KLCI was up 2.67 points to 1,604.55.

The early gainers included United Plantations Bhd, JF Technology Bhd, UWC Bhd, APM Automotive Holdings Bhd, KESM Industries Bhd, Public Bank Bhd, Khind Bhd and Unisem (M) Bhd.

Bloomberg said Asian stocks looked set for a muted start Wednesday after their US peers rebounded from Friday’s selloff as traders parsed the latest earnings reports.

The US dollar retreated, it said.

Inter-Pacific Research Sdn Bhd said it was still down-trending for the FBM KLCI as it gave up its early session rebound yesterday to end the day just a shade above the 1,600-point level, falling for the fourth successive day.

In its daily bulletin today, the research house said sentiments remain guarded ahead of BNM’s interest rate decision and resulting in market volumes staying on the thin side, with losers also surpassing gaining stocks.

Elsewhere, it said there was also profit taking among the broader market shares following their recent gains that have nudged many of them into the overbought territory.

Inter-Pacific said the interest rate decision could dictate the key index’s performance over the near term with expectations split on whether BNM would reduce interest rates further.

“We see the market potentially posting a rebound if interest rates are maintained, but there could be more weakness if rates are cut as it could eat into banks’ margins that are already affected by slower growth due to the weak economic conditions.

“Regardless of the interest rate decision, however, the market environment is already largely indifferent with most market players still on the sidelines. As such, any rebound may be modest, with the downside bias still prevalent due to the lesser support.

“We also note that the 1,600 support remains precarious and if it is breached, the 1,590 level will be the next support. The hurdles remain at the 1,610-1,620 levels,” it said.

Inter-Pacific said the lower liners and broader market shares are starting to see some pullback and we see profit taking actions increasing due to their toppish conditions as well as fewer follow-through buying impetuses.

“Therefore, we expect more near-term selling as their consolidation is likely to continue, which we think is healthy as it would allow the recent gains to be digested,” it said.