KL shares to rise towards 1,600 points level next week

Share prices are expected to rise towards the 1,600 points level next week on Bursa Malaysia boosted by strong local and better than expected global economic data.

The positive sentiment would also be driven by continuous optimism over Greece’s new agreement on austerity reforms, strong funds inflow on prospects of added liquidity from major central banks and rising global equity market.

We believe the long awaited news that Greek politicians had reached a deal on austerity measures, may pave the way for the country to receive a second bail out and avoid a disorderly default on its debt.

In addition, we anticipate the global markets to be further supported from easy interest rate policy decisions announced by European central banks and the Bank Of England last week.

The outperformance shown by emerging markets would also be an added boost to local shares over the near-term.

Going forward, we expect the local market to extend its gains following the strong bullish breakout last week, boosted by gains in selected blue chips and strong rotational plays in lower liners.

The ringgit’s rally and the FTSE Bursa Malaysia Kuala Lumpur Composite Index’s (FBM KLCI) steady gains suggested that the broader market risk appetite on the local assets had improved.

Any breakout above the 1,565 points mark could pave the way for further gains towards the all-time FBM KLCI high of 1,597 points level.

For the week just-ended, the local bourse experienced positive sentiment for the three consecutive trading days.

The highest single-day trading volume, thus far, since the year began was recorded on Wednesday at 4.39 billion shares, a level last seen in February 2007

However, slow progress on Greece’s debt talk influenced sentiment on the local bourse which saw the FBM KLCI gaining on Wednesday and Thursday on active retail participation in penny stocks and selected blue-chips.

Profit taking emerged on Friday to trim earlier gains. On a weekly basis, the FBM KLCI increased 22.89 points to 1,561.66, the Finance Index surged 272.1 points to 13,859.41 and Industrial Index rose 30 points to 2,901.28. The Plantation Index advanced 140.36 points to 8,878.28, the FBM Emas Index jumped 149.97 points to 10,883.76, FBM Mid 70 Index perked 85.3 points to 12,491.83 and the FBM ACE Index chalked up 208.96 points to 4,745.59.

Total weekly volume increased to 11.06 billion shares, worth RM9.08 billion, from 9.52 billion shares, worth RM9.2 billion, registered last week.