US-China talks on bilateral trade to impact Malaysia’s equity

The discussion between the US and China with respect to their bilateral trade would likely be the highlight for the equity market next week, says an economist. It could also be a source of market instability, said Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid. He said market players are currently worried about the turbulence across global markets.

“Generally businesses have become more risk-averse as some countries especially China and Asean nations had recorded below the 50-point demarcation line in their manufacturing index.

“In fact, the US ISM manufacturing index has shown a similar trend, falling by 5.2 points to 54.1 in December 2018.

“Naturally, businesses would reduce their capital expenditure and labour hiring as they would become wary of demand prospects, so we can expect equity markets to remain weak in the near term,” he said.

Mohd Afzanizam said the current support level is at 1,653.

The FBMKLCI might test this level should the discussion not pan out favourably, he added.

For the holiday-shortened week, the FBM KLCI was traded mostly lower, mainly affected by external factors such as US political uncertainties, mounting concerns over poor global growth and the talks on the potential interest rate hikes by the Federal Reserve.

The local bourse and its subsidiaries were closed on Tuesday for the New Year holiday.

On a Friday-to-Friday basis, the benchmark FBM KLCI settled 22.29 points weaker at 1,669.78.

The FBM Emas Index depreciated 124.28 points to 11,413.02, the FBMT100 Index decreased 131.24 points to 11,323.34, the FBM 70 declined 67.72 points to 13,023.80, the FBM Emas Syariah Index erased 152.51 points to 11,356.91 but the FBM Ace edged up 34.23 points to 4,294.43.

Sector-wise, the Finance Index lost 99.90 points to 17,241.79, the Industrial Products and Services Index eased 1.18 points to 165.63, while the Plantation Index was 16.84 points weaker at 6,880.90.

Comparing Friday-to-Friday, the weekly turnover rose to 7.22 billion units worth RM4.79 billion from 5.70 billion units worth RM4.15 billion.

Main Market volume increased to 5.17 billion units valued at RM4.37 billion versus 4.16 billion shares valued at RM3.85 billion.

Warrants turnover advanced to 1.23 billion units worth RM282.94 million compared with 948.80 million units worth RM202.97 million.

The ACE Market volume appreciated to 719.60 billion shares valued at RM127.20 million against 556.26 million shares valued at RM90.05 million.