PETALING JAYA: The FBM KLCI will likely perform better after the US presidential election on Nov 5, according to observers, as the premier index of Bursa Malaysia halted its six-day sliding streak yesterday.
At 5pm, it closed 4.61 points higher at 1,615.08 after touching an intra-day high of 1,619.05, as experts alluded to an absence of catalysts for the lacklustre week.
A total of 2.48 billion shares were traded yesterday and market breadth returned to positive territory as gainers shaded losers 454 to 416, with 628 counters closing unchanged.
Analysts said the cyclical year-end lull could also be a significant factor, although head of equity sales at Rakuten Trade Vincent Lau is expecting the 1,600-point mark to be the psychological support for the bourse.
Speaking to StarBiz, he said investors could be staying on the sidelines pending the outcome of who would be at the White House early next year, while profit-taking from local fund managers might also be playing a part.
“Despite the Budget 2025 being seen as people-friendly, there is not much stirring from that angle, perhaps because there were no new major infrastructure projects announced,” he added.
However, with China’s gradual recovery and solid earnings numbers from the United States, coupled with the monetary easing that most central banks globally are anticipated to execute next year, the FBM KLCI should benefit in the medium term along with other indices.
Looking at the larger picture, Lau said the ringgit’s current exchange rate at RM4.37 to the US dollar is also at a more sustainable level that should be a boon for a net exporter like Malaysia, which indicated that exporting firms could still see supported earnings.
His opinion on the ringgit resonated with many economists, who over the past week had opined that the RM4.10 level against the greenback seen in late September was too sudden.
“The RM4.10 level is probably more reasonable over a slightly longer term, perhaps at end-2025.
“If exporters continue to see healthy profitability, this is also positive for the market,” he said.
On the other hand, he pointed to the relative lack of activity in the market this week to a lukewarm response from the investing public to partner-country admission of Malaysia into the Brazil, Russia, India, China and South Africa or BRICS alliance.
He added that the premier bourse should stay range-bound above the 1,600 level over the week.
Nixon Wong, chief investment officer at Tradeview Capital.
Meanwhile, chief investment officer at Tradeview Capital Nixon Wong revealed that foreign investors had also been shorting the Malaysian market as most punters are staying on the sidelines until the completion of the US presidential election.
“There has just been limited catalyst in the near term.
“When liquidity is limited without much buying interest plus net selling by foreigners, there would be downward pressure on prices,” he noted.
Commenting on the positive performance of the FBM KLCI, Wong said it was possibly a spillover impact from strong US data, as earnings results continued to show resilience.
He opined that the effect in turn had led to positive sentiment in the global market, and some investors are bottom fishing the oversold index components such as the YTL Corp Bhd
conglomerate and its related companies.
“The near term risk is the outcome of the US election and incoming Federal Reserve fund rate decision on Nov 8, so we reckon sideway trading to remain for the immediate future,” he said.
At the same time, an investor who is well-versed with Malaysian equities observed that it could be a good time to identify the stocks that one intends to purchase and wait for the presidential election to conclude before making a move.
Acknowledging that noise coming from the US media is likely to favour former president and Republican candidate Donald Trump, a victory for the New York real estate mogul may shake up markets more compared with a Kamala Harris win, and the FBM KLCI may likely also react in similar knee-jerk fashion.
“As such, the week after the presidential election could be bargain hunting time, depending on who one is betting to be the 47th US president. Over the longer term, however, markets should recover accordingly,” he said.
The investor commented that the FBM KLCI’s rise yesterday could also signified bargain hunting to an extent, as the index has been on a losing streak since Oct 21, following Budget 2025 which was announced on Oct 18.
