BEARISH MOOD: But blue chips may see positive upswings, say analysts
THE bearish mood in Bursa Malaysia, which has tumbled to its lowest levels in a year, will prevail as long as crude oil prices are unstable, analysts said.
However, they pointed out that the blue chips could see positive movements before the year ends as they are now trading at attractive levels, driven by window-dressing activities.
The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) lost 35.68 points to close at 1,697.31 points, its lowest in a year, on Monday following selldown by foreign funds.
The downtrend continued on Tuesday, with the benchmark index slipping another 23.37 points to 1,689.86. However, it staged a relief rebound yesterday, climbing 7.96 points to 1,681,90.
“I expect the weak sentiment to continue for as long as the crude oil prices are unstable. People are worried about the direction of the crude oil price and its impact on our economy. This is the main reason for the selldown by foreign investors,” said TA Securities head of research, Kaladher Govindan.
According to Reuters, Brent crude was trading below US$60 (RM209.4) a barrel yesterday as major oil producers signalled they would maintain output despite a supply glut and faltering demand.
Kaladher expects blue chips to show minor upswings in the coming days.
“Blue chips are trading at attractive levels now, so I expect some positive movement in the stocks, probably around the last week of the month. There could be some minor upswings, provided that there is no more serious drop in crude oil prices.
“It will not drive the market significantly higher, unless the United States says it will prolong low interest rates for a considerable time — then it will be a positive supporting element,” he explained.
Another analyst said the falling oil prices have affected many economic variables, resulting in investors taking the “safe route by getting out of the local equity market and simply watching”.
“Foreign funds may also use our present weak currency to lock in profits for the year. Some would be cutting losses if they had recently got into the market. But this almost indiscriminate plunge across the board presents some buying opportunities on value stocks, stocks of companies with solid fundamentals,” added the analyst.
BIMB Research yesterday noted that net foreign outflow amounted to RM312.6 million on Tuesday, pushing net outflow at a hefty RM2.45 billion for December thus far.
Reuters reported that an uneasy hush settled over Asian markets yesterday as a brewing financial crisis in Russia and the rout in oil prices sent investors scurrying for the cover of top-rated bonds.
It said that yields on British, Germany and Japan sovereign debts had all hit record lows while long-dated US and Australian yields reached their lowest since 2012.