12 Jul 2013 11:19

KUALA LUMPUR, July 6 (Bernama) -- The FTSE Bursa Malaysia KLCI (FBM KLCI) futures contracts on Bursa Malaysia Derivatives are likely to trend higher next week on positive signs of foreign inflows, dealers said.

Affin Investment Bank Vice-President and Head of Retail Research Dr Nazri Khan said Bursa's resilience began in the first week of the second half of the year on a strong note largely due to incoming foreign inflows and safe haven play which helped local investors to shrug off negative economic news elsewhere.

Nazri said the local bourse once again showed resilience amid volatility and is now among the top performers in the region based on the premium valuation relative to Asean peers which is back to a near 5-year average, largely due to Malaysia's low beta market, foreign defensive inflow and domestic liquidity.

Furthermore, there are signs that Bank Negara Malaysia will hold the OPR steady at 3.0 per cent throughout 2013 and the government will delay the subsidy removal to year-end or beginning of 2014.

Under such circumstances, local equities should be well supported from greater stability of input price and cost of funds.

Furthermore, the latest data shows Malaysia having a revitalisation of investment, which will push the local GDP up to 5.4 per cent in 2014.

"All of this should be translated into greater corporate earnings and higher local equity prices in the near and medium term," he told Bernama.

Globally, Nazri said, the positive jump in global equities after the Bank of England and the European Central Bank caught the markets off guard with comments aimed at countering rises in market interest rates.

"We notice that worries over Egypt, which had unsettled global markets and helped push up oil prices, have also appeared to calm down," he said.

Positive developments can be seen in Egypt’s benchmark stock index jumping 7.3 per cent while Brent crude oil slipped to $105.47 a barrel last Friday.

There was also positive news from China’s money markets where interbank rates continued to retreat from the elevated levels seen last month.

On the technical front, the intermarket picture suggests the FBM KLCI gaining some upside momentum and its ability to hold above the 1,760 level should add more technical power to the bulls.

The uptrend so far remains intact with the FBM KLCI still holding above the 20-, 50- and 200-day moving averages near the 1760 and 1750 support levels, he said.

Meanwhile, during the week just ended, the FBM KLCI futures market moved in tandem with the cash market, which was influenced by external developments. On a Friday-to-Friday basis, the FBM KLCI eased 1.2 points to 1,772.27 compared with last Friday's close of 1,773.54. July 2013 was 7.0 points higher at 1,775, August 2013 increased 7.5 points to 1,775.5 while September 2013 added 6.5 points to 1,773.50 and December 2013 gained 7.5 points to 1,775.

Turnover more than doubled to 28,572 lots from 114,051 lots last week, while open interest slipped to 37,212 contracts from 47,196 contracts previously. -- BERNAMA