KUALA LUMPUR: Bursa Malaysia is expected to trend lower next week, driven by an escalation in trade tensions between the United States and China, as well as a softening of currencies and commodities.
Phillip Capital Management, Asia-Pacific, senior vice president (investment) Datuk Dr Nazri Khan Adam Khan said the current geopolitical climate is believed to be forcing investors to go on the defensive by taking a tighter grip on sentiment.
“The risk aversion resulting from the US-Sino tariffs war will have a negative impact on local exports and economic growth. The latest US move to blacklist Chinese telecommunications giant Huawei reflects no near peaceful solution between these two economic giants,” he told Bernama.
Nevertheless, he said there are numerous export opportunities for Malaysia as an ASEAN member as other countries, especially Vietnam, sees it as the best to do export business with.
“The past year has shown positive growth in economic and trade cooperation between Malaysia and Vietnam. Bilateral trade was nearly US$11.5 billion (US$1=RM4.18) in 2018,” Nazri Khan added.
Vietnam exported electronic products, mainly computers and mobile phones, spare parts, transport vehicles, as well as wood and timber products, while Malaysia’s exports comprised petroleum, electronic components, textiles, chemicals and also plastics.
Nazri Khan said based on the current conditions, investors are advised to stay away from stocks exposed to foreign risks.
“For risk management purposes, it is best to focus on the local market, in line with the positive growth in Malaysia automotives,” he said.
For the week-just-ended, local equities started off the holiday-shortened-week with continuous lower gaps amidst rising concerns over threats towards global trading relations.
Nazri Khan said global equities took a sharp turn downwards on Thursday, furthering the global sell-off as the latest ban on Huawei deteriorated further the relationship between the US and China.
“In Asia, smartphone-related firms were among the biggest to lose value,” he said.
The market was closed on Monday for Wesak and on Wednesday for the Nuzul Quran holidays.
On a Friday-to-Friday basis, the benchmark FBM KLCI settled 7.04 points weaker at 1,598.32.
The FBM Emas Index fell 112.13 points to 11,187.92, the FBMT 100 Index declined 94.99 points to 11,041.81 and the FBM Emas Shariah Index eased 135.84 points to 11,315.5.
The FBM Ace Index lost 106.14 points to 4,289 and the FBM 70 slid 305.79 points to 13,549.53.
Sector-wise, the Financial Services Index declined 28.31 points to 16,534.56, the Plantation Index eased 78.41 points to 6,817.09 and the Industrial Products and Services Index edged down 1.81 points to 162.01.
Weekly turnover fell to 6.07 billion units valued at RM5.12 billion from 11.80 billion units valued at RM9.41 billion.
Main Market volume was weaker at 3.83 billion shares worth RM4.67 billion from 6.97 billion shares worth RM8.65 billion.
Warrants turnover slid to 1.06 billion units valued at RM280.38 million from 1.67 billion units valued at RM427.70 million.
The ACE Market volume contracted to 1.16 billion shares worth RM177.59 million from 3.22 billion shares worth RM326.88 million. — Bernama