Shares on Bursa Malaysia is expected to trend higher next week with the FTSE Bursa Malaysia KLCI (FBM KLCI) testing its all-time record high of 1,826.22 level on the back of the United States debt breakthrough and the upcoming 2014 Budget on Friday.
Affin Investment Bank vice president and head of retail research Dr Nazri Khan said local stocks should get momentum from the strong performance of global equity markets, which already rose to five-year highs after the US Congress approved an 11th-hour deal to reopen the federal government and raise the debt ceiling, averting a potential default.
"We expect many Asian bourses including Bursa to play catch-up on news of the budget deal, with Tokyo’s Nikkei 225 leading the region while the FTSE All-World equity index rising to its best close since May 2008.
"We anticipate more bullish equity follow-through in part to the fact the debt ceiling deal would eliminate the last major global financial hurdle for 2013," he told Bernama.
Nazri said the FBM KLCI fell only about 2.5 per cent from its September high of 1,805 and had recouped most of that loss in just one week.
He said with the debt deal behind, the focus of global investors is now firmly on the economic growth and corporate earnings in the coming third-quarter results.
"Although we believe the crisis has been postponed rather than solved, the temporary solution of the US fiscal impasse may give ample room for punters and traders to ride on the stock market momentum," he added.
Nazri said given the bullish seasonalities of October-December and the benchmark index registering the second consecutive month of uptrend, the investment bank saw higher probabilities for deeper upside, following the strong performance by the local market over the past year.
The barometer index has gained 6.7 per cent since January 2013 and 37 per cent since September 2011.
On the technical front, the possible upside penetration of FBM KLCI to breach the psychological resistance of 1,800 will open up upside possibilities of a new leg towards 1,850-1,900 level over the medium term.
On the upcoming budget, Nazri said the 2014 Budget would focus on balanced and quality growth with a realistic gross domestic product target of five per cent, while maintaining price stability amid rising cost of living.
The government is also expected to maintain fiscal consolidation with more bold policy reforms to raise the country’s competitiveness and efficiency.
"The single biggest catalyst should be the extension of oil and gas projects and expansion of BR1M (payment magnitude and qualifying salary) to mitigate the rising cost of living on the low-income group, which should generally benefit oil and gas and consumer stocks," he said.
Apart from that, the 2014 Budget would incorporate the much-delayed projects and structural reforms to raise investors confidence and attract more foreign inflows into Bursa Malaysia.
During the week just-ended, shares continued to gain starting Monday and took a breather on Tuesday due to the Hari Raya Aidiladha public holiday.
The rally continued on Wednesday until the last day of trading.
As at October 17, foreign participation in the local bourse was about 20.62 per cent, local institutions at 54.06 per cent and local retail at 25.32 per cent.
On a Friday-to-Friday basis, the FBM KLCI rose 13.84 points to 1,799.59, the Finance Index surged 117.26 points to 16,809.06, the Plantation Index advanced 69.26 points to 8,429.75 and the Industrial Index improved 26.86 points to 3,094.92.
The FBM Emas Index jumped 99.51 points to 12,531.17, the FBMT100 Index went up 98.6 points to 12,262.01, the FBM 70 Index was 133.09 points higher at 14,335.93 and the FBM ACE Index rose 25.92 points to 5,529.49.
Weekly total turnover dropped to 6.172 billion shares worth RM6.707 billion from last week's 8.34 billion shares valued at RM7.25 billion.
Main market volume fell to 4.822 billion units valued at RM6.406 billion from 5.61 billion units worth RM6.71 billion previously.
Warrants turnover declined to 99.263 million shares worth RM10.603 million from last Friday's 134.03 million units worth RM13.29 million.
The ACE market volume also slipped to 1.199 billion shares valued at RM279.502 million from 2.56 billion shares valued at RM515.9 million previously.-- Bernama