BULLISH: Market will be unfazed by US debt ceiling issue, say analysts
Bursa Malaysia is expected to remain bullish despite the United
States debt ceiling deadline today because of expected goodies in the 2014 Budget to be unveiled next week.
Analysts said stocks on the local market have not fared that badly since the partial shutdown of the US government on October 1.
There would not be much impact from the US debt ceiling issue as the market has discounted this situation for two weeks now, said
Mercury Securities head of research Edmund Tham.
He said the market has been quite resilient amid the uncertainty of the US crisis and is well-supported by retail players and local institutions.
Tham added that if the US failed to meet today’s deadline to raise its debt ceiling, generally it would not be good news in the longer term but the local market has been quite resilient of
late in the face of negative external developments.
Another analyst said local market sentiment has not been affected too much by the US scenario as even prior to the government shutdown, the state of the world’s largest economy
was not exactly at its best.
“Our market has been discounting these external developments
for quite some time already, whether it is the US or the eurozone and any bad news that came from these countries had only left temporary impact,” said the analyst.
The analyst added that investors are more keen to find out
what’s in store for them in the budget announcement next week, as the government promised a people-friendly budget while addressing its fiscal deficit concerns.
The benchmark FTSE Bursa Malaysia KLCI, since the day the US began its partial shutdown, had risen 1.26 per cent, or 22.34 points, to close yesterday’s trade at a two-week high of 1,791.37 after hitting an intra-day high of 1,795.48.
While most other key regional markets have been mixed in the past weeks ahead of today’s deadline for the US debt crisis, the Kuala Lumpur stock market had been bucking the trend.
Analysts said it would be interesting to see the regional markets’ reactions, including Malaysia’s tomorrow, after the end of the debt ceiling deadline.
While some analysts are expecting the US government to extend the deadline, others said it is not all doom and gloom if the US politicians could not come to an agreement to lift their government’s US$16.7 trillion (RM52.9 trillion ) borrowing limit.
They said the US Treasury has a one-week window after that and a deal can be struck anytime during that period before it has to issue more debt to pay the bills.
The analysts, however, agreed that in the long run if US debt problems are not timely and orderly dealt with, the economic effects can be quite catastrophic.