Friday June 29, 2012
Analysts see difficult upward struggle for FBM KLCI
By DANIEL KHOO
KUALA LUMPUR: Global economic events, the tapering out of foreign fund inflows coupled with the loss of momentous support from local institutional funds on the FTSE Bursa Malaysia KL Composite Index will definitely bleak its outlook in the near term.
According to Interpacific Research’s head of research, Pong Teng Siew, the market is expected to continue to fall in the next couple of days on the backdrop of local funds which have been selling in the past few days.
“Well, foreigners have been net buyers in the past few days but the follow-through interest from them has not been strong enough. There will be erosion of price-to-earnings ratio and there will be a struggle upwards for the FBM KLCI,” Pong told StarBiz over the telephone.
“I really don’t think we can escape should there be a major correction in global markets as we are somehow connected to the global economy. All eyes now are on Europe’s resolve for the debt crisis moving forward,” he added.
Despite that, however, Hong Leong Investment Bank said the market could continue to trend upwards after the strong debut of Felda Global Ventures Holdings Bhd’s initial public offering (IPO) yesterday.
In a note, Hong Leong said a strong premium above its IPO price was “likely to lend support to the bullish sentiment despite lingering concerns of the eurozone debt crisis.”
However, it warned that a selldown could also be imminent, saying in the technical outlook report that a breakdown below 1,591 points would trigger further selldown towards 1,582 points (20-day simple moving average) and 1,575 (50-day simple moving average).
Hong Leong added that the more solid support was at 1,569 points (30-day simple moving average) and 1,550 points.
In another note, Maybank Investment Bank’s head of retail research, equity market, Lee Cheng Hooi, stated that the market could trade sideways in the meantime before a clearer trend emerged.
“As the Stochastic (indicator) has issued a sell signal, a sideways phase between 1,593 points and 1,611 points may take place before a clearer trend emerges,” Lee wrote.