Malaysia's FBM KLCI rises amid cautious market tone

[MALAYSIA] Malaysia's benchmark index opened higher on Wednesday, snapping a four-day losing streak driven by profit-taking activity, though analysts anticipate the consolidation trend to persist in the short term. The FBM KLCI gained 4.07 points to close at 1,552.95, climbing back above the key psychological level of 1,550 amid a backdrop of cautious sentiment.

In recent weeks, the index’s performance has been shaped by a blend of global economic developments and domestic conditions. Uncertainty in the global outlook—driven by inflationary pressures and ongoing adjustments to interest rates in major economies—has prompted investors to adopt a more defensive stance, particularly those with short-term investment horizons. Domestically, economic indicators have painted a mixed picture, with resilience in some sectors offset by weaknesses in others.

According to Rakuten Trade, investor participation remains subdued due to the absence of compelling market catalysts, particularly from the retail segment.

Retail investors, in particular, have shown a more cautious approach in response to prevailing market conditions. The lack of upbeat developments and lingering uncertainty has contributed to lower retail trading activity. Analysts expect this trend to persist unless a notable shift in sentiment or fresh market-moving catalysts emerge.

“We do not foresee a market trend reversal in the near term. The index is likely to remain within the 1,545 to 1,555 range today,” Rakuten Trade noted. On the international front, investors are closely watching ongoing U.S. trade negotiations with India and Japan. TA Securities highlighted that the outcome of these talks could offer insights into future engagements with other trading partners in the region, influencing broader market sentiment.

As Malaysia is heavily reliant on international trade, any shifts in tariff structures or new trade agreements could significantly affect its export-driven sectors. Market participants are monitoring these developments for potential implications on the local economy and the equity market.

“Immediate resistance for the KLCI stands at 1,610, with further resistance levels at 1,644 and the August 2024 high of 1,684. Support is currently pegged at 1,526, followed by stronger levels at 1,490 and 1,444,” TA Securities added.

In corporate developments, Sunway Construction advanced 25 sen to RM5.13 following the release of its earnings report. Hume Industries climbed 15 sen to RM3.00, while Time dotCom rose six sen to RM5.27.

Among heavyweight gainers, Hong Leong Bank added 12 sen to RM20.02, QL Resources was up seven sen to RM4.66, and IOI Corporation increased seven sen to RM3.69.

Sector performance across the index was mixed. The banking sector remained steady, supported by strong capital buffers and consistent earnings, with Hong Leong Bank among the top performers. The construction and industrial segments showed selective strength, buoyed by positive earnings announcements from companies like Sunway Construction and Hume Industries.

Among the most active stocks in early trade were Harvest Miracle, unchanged at 18 sen; Sarawak Cable, which slid 4.5 sen to 3.5 sen; and Alam Maritim, which edged up 0.5 sen to 3.5 sen.

With market volatility and economic headwinds likely to persist, analysts are advising investors to remain selective and focus on companies with solid fundamentals and defensive business models. They also recommend staying informed on both global macroeconomic trends and domestic policy changes that may influence market direction.