Malaysian traders cautious ahead of Fed and BNM rate hikes

Fluctuations in interest rates are worrying traders and investors in the Malaysian stock market amid expectations of the results of the November meetings of the Federal Open Market Committee and Bank Negara Malaysia (BNM).

Markets are expecting the US Federal Reserve to raise interest rates by 75 basis points, while in Malaysia they may raise by 25 basis points.

Interestingly, the results of the meetings will be accepted with a difference of one day, since the meetings of Bank Negara Malaysia are scheduled to take place on November 2-3.

Investment bank Hong Leong is predicting that FTSE Bursa Malaysia KLCI aka FBM KLCI will trade in a range-bound ahead of results from a recent bounce off a two-year low of 1,373.

According to the data, profit-taking may limit growth near the levels of 1,468 and 1,480, while the level of 1,500-1,518 will be more difficult to overcome.

With the new Malaysian government slated to support domestic consumption, traders and investors would do well to look to banks, telcos, utilities, consumer goods, healthcare, and construction.

Some analysts still believe that the current valuation may attract the interest of traders and investors.

On Friday, the FBM KLCI retreated from the 1,450 level it passed two days earlier as the market as a whole began further profit-taking.

Sluggish trading on the local bourse saw marginal results from regional markets as traders were in the process of reviewing the European Central Bank and Bank of Japan interest rate announcement.

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A week earlier, the FBM KLCI added 0.89 points to 1,447.31 from 1,446.42.

The FTSE Bursa Malaysia EMAS Index (FBMEMAS) rose 54.50 points to 10,275.40 and the FTSE Bursa Malaysia Mid 70 (FTFBM70) jumped 207.94 points to 12,236.57, while the FBMT 100 index also added 44.39 points to 10,014.85.

EMAS Shariah Index (FTFBMS) rose 125.11 points to 10,322.51 and FBM ACE rose 80.03 points to 4,881.30.

By sector, the financial services index fell 125.04 points to 16,386.04, the industrial goods and services index fell 0.31 points to 175.45, the plantation index added 35.78 points to 6,843.05, and the energy index rose 18.02 points to 697.57.

During the last trading week, weekly turnover fell to 9.78 billion units worth RM8.08 billion from 11.36 billion units worth RM9.03 billion the previous week.

While the main market volume was lower at 5.87 billion shares worth RM5.77 billion versus 7.24 billion shares last week worth RM7.85 billion.

The volume of the order decreased to 1.36 billion units worth 231.45 million ringgit from 1.41 billion units worth 232.65 million ringgit earlier.

ACE market volume declined to 2.55 billion shares worth RM1.08 billion from 2.71 billion shares worth RM942.67 million.