EXPECT SIDEWAYS TRADING FOR BURSA MALAYSIA AHEAD OF 2019 BUDGET

By Harizah Hanim Mohamed and Niam Seet Wei

KUALA LUMPUR, Oct 21 (Bernama) -- Shares are expected to see sideways trading in the next three weeks, with foreign investors adopting a waiting game ahead of the 2019 Budget announcement on Nov 2.

M&A Securities Sdn Bhd Chief Dealing Officer R Sundararajah said the trend was likely to continue at least until budget day, as the current FTSE Bursa Malaysia KLCI (FBM KLCI)  was confined within a limited range, having traded at 1,728.74 on Monday before finishing at 1,732.14 on Friday.

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"The reduction in allocation for the country’s development has raised some concerns among investors, particularly in infrastructure-related stocks. Therefore, it resulted in the benchmark index opening 8.28 points lower at 1,729.73 on Friday," he told Bernama.

Prime Minister Tun Dr Mahathir Mohamad revealed that the government would take bold moves in the 2019 Budget, expecting the government to cut development expenditure apart from estimating the 2019 Budget allocation to be based on an average crude oil price of US$70 per barrel. 

Dr Mahathir announced this when presenting the 11th Malaysia Plan Mid-Term Review Report (2016-2020) in the Dewan Rakyat on Thursday.

However, Sundararajah reiterated that foreign investors, which made up 23 per cent of Bursa Malaysia's trading volume, remained cautious but an exodus of them from the local bourse was not anticipated.

"Though there is continuous foreign nett outflow, the amount is not alarming," he added.

Foreign funds had been net sellers from Monday to Thursday last week with foreign selling amounting to RM93.7 million compared with RM877.6 million recorded in the previous week.

Meanwhile, Inter-Pacific Securities Sdn Bhd Head of Research Pong Teng Siew believed the government's move to include new tax measures would be welcomed by the investment community as they aimed to help reduce the country's fiscal deficit.

"But, will this encourage more foreign inflow? I believe investors might adopt a wait-and-see approach in the short-term before their confidence is restored in the long-run," he said.

Commenting on Monday-Thursday’s fund flow, Pong attributed the reduced amount of foreign selling on Bursa Malaysia as a normal cycle after a long spell of relatively large selling in the previous week.

"Thursday saw a net inflow of RM33.3 million, but the amount is too small for us to conclude any change in trend at the moment," he added.

As for next week, he opined that foreign outflow might continue but the selling might taper down.

"The selling might not be as big next week, and they may turn as net buyers for a while. We noticed that international net selling was quite big between Oct 5-17, amounting to almost RM1.4 billion worth of shares on Bursa Malaysia.

"But, I think they will take a breather for now as they may have limited shares to sell, that's why they will slow down their selling," he concluded.

-- BERNAMA