KLCI poised to extend consolidation this week

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mid_morning_market_down_theedgemarkets

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KUALA LUMPUR (Jan 5): The FBM KLCI reversed its earlier gains and fell some 0.8% at mid-morning on Monday, looking set to extend its consolidation this week.

At 10am, the FBM KLCI reversed its earlier gains and fell 14.74 points to 1,738.03. The index had earlier dipped to 1,735.48.

The top losers included British American Tobacco (M) Bhd, Hong Leong Financial Group Bhd, Public Bank Bhd, Petronas Gas Bhd, UMW Holdings Bhd, Lafarge Malaysia Bhd, Favelle Favco Bhd, PPB Group Bhd, Petronas Dagangan Bhd and Malayan Banking Bhd.

The actively traded counters included Minetech Resources Bhd, Malayan United Industries Bhd, Iris Corporation Bhd, AirAsia Bhd, Benalec Holdings Bhd and Jobstreet Corporation Bhd.

The gainers, meanwhile, included Oriental Holdings Bhd, MISC Bhd,Cahya Mata Sarawak Bhd, Sunway Bhd and IJM Land Holdings Bhd.

The euro hit a nearly nine-year low versus the dollar on Monday as investors bet on quantitative easing by the European Central Bank while Asian shares were subdued as soft manufacturing surveys soured the mood, according to Reuters.

The euro fell to as low as $1.18605, its weakest level since March 2006, having fallen below an important support at $1.20. The common currency last traded at $1.1944, down 0.5 percent from late U.S. trade on Friday, it said.

Hong Leong IB Research said that overall, the local market was poised to extend its consolidation this week.

“Immediate challenge for the FBM KLCI will be 1762 (30-d SMA) to 1784 (50% FR) zones.

“Key supports are situated near 1747 (10-d SMA), 1737 (20-d SMA) and 1725 (23.6% FR),” it said.

Meanwhile, Malaysia was the biggest loser in 2014 in terms of foreign fund outflow, suffering a net sale of U$2 billion (RM7.06 billion), the the biggest outflow since the 2008 crisis exodus, according to MIDF Research.

In his weekly fund flow report Monday, MIDF Research head Zulkifli Hamzah the FBM KLCI, the best performing Southeast Asian market in 2013, received a heavy knockdown in 2014 as it ended the year at the bottom spot.

“We believe this privation was brought about by a confluence of factors. Firstly, due to our earlier outperformance, the FBM KLCI was among the most expensive market based on valuation-term in early 2014.

“Thus in January last year, we forewarned of the possibility “that without favourable earnings revision going forward, the tendency for the market to mean revert may result in FBM KLCI underperforming its peers this year””, he said.

Zulkifli said that unfortunately, the situation thenceforth was less than favourable as witnessed by the persistent downward earnings revisions pursuant to the past four consecutive reporting seasons.

“Secondly, our part dependence on oil and gas as an important source of state revenue was dealt a blow in view of the falling crude prices,” he said.