The local stock market, Bursa Malaysia, finally breathed a sigh of relief yesterday when it successfully ended its two-day decline. Bargain hunting activities on blue-chip stocks helped the main index defend its position from continuing to decline.
The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) is now seen stable at around 1,682.13 points after successfully rebounding 2.21 points. However, analysts see the overall market still being cautious due to being influenced by overseas sentiment. Economy
Here is what is driving the direction of the local stock market today:
1. Mixed Wall Street & Foreign Funds Still Out
The volatility on Wall Street, especially the selling pressure on technology sector stocks overnight, has somewhat curbed local investors' appetite to chase higher prices. Coupled with regional indices such as the Hang Seng (Hong Kong) which are still fragile, institutional investors are seen as more comfortable taking a wait and see approach.
The latest trading data also shows that foreign investors are still actively selling (foreign outflow). Fortunately, the selling pressure was successfully balanced by local institutional investors and retailers who wisely took the opportunity to buy shares at a "discount" price.
2. Today's Hottest Stock & Corporate Highlights:
Commodity & Consumer Sector Advances: United Plantations shares led the market gains when they jumped to RM33.62, while consumer sector giant Nestle also recorded an increase to RM95.66.
Giant PETRONAS News: The local oil and gas (O&G) sector got a big tonic after PETRONAS announced a mega-scale gas discovery offshore Suriname, which is estimated to be equivalent to the potential of 1 billion barrels of oil! This good news is expected to provide a flood of contracts to local energy service providers such as Keyfield International, which recently signed 13 new charter contracts.
XL Holdings Shares 'Hanged' by IDSS: XL Holdings Bhd's counter stole the market's attention when Bursa Malaysia suspended intraday short selling (IDSS) activities on the stock. This emergency measure was taken after the price suddenly plunged by more than 15% in the previous session, even though the company had just reported an increase in net profit.
IPO Fever Still Hot (Eckem Holdings): The latest IPO stock on the ACE Market, Eckem Holdings Bhd (industrial chemical company) which will be listed on July 3, reported a very solid public subscription performance when it was oversubscribed by 8.09 times! This is proof that local investors' cash liquidity for the IPO market is still strong.
Where is the FBM KLCI Going Next?
From a technical perspective, analysts expect the FBM KLCI to try to test the nearest resistance level at 1,690 to 1,700 points in the near future. Meanwhile, strong support level awaits at around 1,675 points.
In addition, investors' focus is now on the Parliament session which is currently heatedly discussing critical domestic policy issues including the direction of fuel subsidy rationalization and national energy security.
Any latest government policy announcements will certainly have a direct impact on the direction of Bursa Malaysia for the third quarter of this year.
Conclusion for Traders: Our stock market seems to have strong support from local sharks even though foreign investors are 'selling'. The O&G sector and IPOs seem to be among the most interesting depths to watch at the moment. Do you hold O&G stocks in your portfolio this week?
