FBM KLCI dips amid profit-taking and cautious market sentiment

[MALAYSIA] Selling pressure from the previous week continued to weigh on local equities as the market opened the new trading week on a cautious note, with investors awaiting fresh cues from the upcoming corporate earnings season.

Analysts attribute the subdued sentiment to persistent global macroeconomic uncertainties, especially concerns surrounding inflation and the trajectory of monetary policies by major central banks. The US Federal Reserve's cautious stance on interest rate cuts has contributed to muted activity across regional markets, including Malaysia, as investors reassess their risk appetites.

The FBM KLCI shed 5.18 points to close at 1,566.57 at Monday’s open, reflecting profit-taking behavior after strong gains in the earlier part of the previous week. TA Securities Research observed that technical indicators suggest the FBM KLCI is currently in an overbought zone, hinting at a potential pullback or consolidation among blue-chip stocks.

Despite the overall market softness, certain sectors—namely technology and plantation—have demonstrated resilience. Analysts noted selective buying in companies with strong earnings visibility or those benefiting from favorable commodity price movements. However, overall momentum remains constrained in the absence of clear policy signals or significant earnings surprises.

"Medium-term momentum and trend indicators remain bullish for the benchmark index, indicating potential for further upside," TA Securities said in its commentary. "Still, a more robust buying interest and liquidity support are essential for a sustained rally, given the current lack of domestic catalysts."

Rakuten Trade reported that local institutional investors have begun locking in gains, turning net sellers, even as foreign funds cautiously return to Malaysian equities. These foreign inflows, however, have been limited and primarily focused on select large-cap stocks in the banking and utility sectors, highlighting the difficulty in generating widespread market strength amid ongoing external uncertainties, including geopolitical tensions and volatile commodity prices.

The brokerage also noted waning enthusiasm in newly listed stocks on Bursa Malaysia, expressing hope that retail investor interest will shift to the secondary market. "For today, we anticipate the index will move within the 1,570 to 1,580 range," Rakuten Trade said in a market note.

Blue chips were broadly lower, with the financial sector leading declines. This mirrors regional trends as Asian banks grapple with narrowing net interest margins and tepid loan growth. Market watchers suggest a rotation into more defensive plays, such as healthcare and consumer staples, which have shown relative resilience.

Among key laggards, CIMB dropped six sen to RM7.12, Hong Leong Bank fell 14 sen to RM20.06, and RHB slipped five sen to RM6.65. Nestle retreated 62 sen to RM81.06, while Gamuda eased four sen to RM4.55.

On the broader market, actives included NexG, up 0.5 sen to 38 sen; Harvest Miracle, unchanged at 18 sen; and Innature, which added one sen to 23.5 sen.