Cautious trading on Bursa expected ahead of OPR announcement next week

Institution : Bank Negara Malaysia - BNM, Bank Islam Malaysia Berhad
16 January, 2021      160



KUALA LUMPUR (Jan 16): Trading on Bursa Malaysia is expected to be cautious ahead of Bank Negara Malaysia's (BNM) Overnight Policy Rate (OPR) announcement on Wednesday.

Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said a possibility of another rate cut by the central bank could not be ruled out, given the highly fluid situation arising from the resurgence of Covid-19 cases and the reinstatement of the Movement Control Order (MCO 2.0).

"Any further cut in the OPR will likely cause prices of banking stocks to drop, which will subsequently drag the local bourse as banking stocks make up a heavy weightage in the FTSE Bursa Malaysia KLCI (FBM KLCI).

"Taking this into consideration, the FBM KLCI is expected to trade within a range of 1,620 to 1,640 next week," he told Bernama.

BNM will hold the first Monetary Policy Committee Meeting for 2021 on Jan 22. At present, the OPR stood at the lowest level of 1.75% after four cuts, resulting in a 125-basis-point reduction, last year.

Overall, sentiment in the market is mostly centred on the declaration of a nationwide state of emergency amid rising Covid-19 cases, reinstatement of MCO in several states beginning Jan 13, US stimulus package and US-China trade war.

On Tuesday this week, the Yang di-Pertuan Agong Al-Sultan Abdullah Ri'ayatuddin Al-Mustafa Billah Shah proclaimed an emergency that would be enforced until Aug 1 as a proactive measure to contain the worsening Covid-19 pandemic in the country.

Prime Minister Tan Sri Muhyiddin Yassin has assured that business activities would remain as usual despite the emergency declaration.

Late Thursday, President-elect Joe Biden announced a US$1.9 trillion pandemic support proposal in a bid to stem Covid-19 uptick and stabilise the US economy. In addition, the global market was rattled after the outgoing President Donald Trump’s administration blacklisted Chinese companies such as Xiaomi.

The US Department of Defence yesterday added Xiaomi to its list of companies with alleged links to the Chinese military.

On a Friday-to-Friday basis, the benchmark FBM KLCI slipped 6.18 points to 1,627.01 from last week's 1,633.19.

On the scoreboard, the FBM Emas Index rose 68.89 points to 11,706.34, the FBMT 100 Index advanced 32.73 points to 11,440.54, the FBM 70 jumped 340.30 points to 14,828.41, the FBM Emas Shariah Index improved 50.75 points to 13,204.69 and the FBM ACE Index surged 298.70 points to 10,796.11.

Sector-wise, the Financial Services Index gained 23.37 points to 15,031.38 and the Industrial Products and Services Index added 4.22 points to 178.80, while the Plantation Index dropped 52.93 points to 7,365.36.

The Energy Index lifted 14.79 points to 859.05, the Healthcare Index was 18.97 points lower at 3,608,82 and the Technology Index increased 8.72 points to 75.44. Weekly turnover decreased to 34.50 billion units worth RM25.36 billion from 37.90 billion units worth RM26.49 billion last week.

Main Market volume eased to 21.58 billion shares valued at RM21.07 billion from 22.51 billion shares valued at RM21.52 billion previously.

Warrants turnover declined to 2.52 billion units worth RM403.12 million from 2.56 billion units worth RM373.54 million in the previous week. 

The ACE Market volume dipped to 10.40 billion shares valued at RM3.89 billion from 12.91 billion shares valued at RM4.59 billion previously.

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