MIDF warns of a “red” October. (The SUN Daily) PETALING JAYA: MIDF Research which just two weeks ago was optimistic that this month would see a reversal of fortune for the local market has instead warned of a red October. We wrote two weeks ago raising our optimism that October is going to be a reversal in fortune compared with the September blues experienced. This is based on history indicating a higher probability of October returning a positive outcome. We are being proven wrong. We believe it is going to be a red October in 2014; the first monthly decline in six years, and only the third time in 13 years, its head of research Zulkifli Hamzah said in his weekly fund flow report yesterday. He said that the mountain was rather too high to climb for the market to turn around the situation and noted that the recently announced Budget 2015 was unlikely to reverse the trend. The technicals are advising to stay away from the market. The KLCI and FBM70 are deep below the long-term support, as represented by the 200-day moving average (DMA) line. We are particularly concerned by how fast the race to the bottom had been, and we do not believe that the market has settled, he warned. ----------------- Profit.at.Bursa ----------------- Last Friday was the fourth worst one-day performance for the KLCI this year and October is already the worst month for the FBM70 this year and the second worst for the KLCI although it has only been seven trading days. We are particularly agitated with the spectre of a death cross for the KLCI. This occurs when there is a negative crossover between the 50DMA and 200DMA lines that is the former cuts the latter from above. Such an event spells a long-term downswing, said Zulkifli. He said if the current state of depressed sentiment persists this week, the small and mid-caps will be the most vulnerable. The FBM Smallcap index only broke the 200DMA last week and it could be racing to the bottom, as had been the case with FBM70 and to a lesser extent, the KLCI. The KLCI reported its worst week this year, falling 1.74% last week. It has lost 3.1% for the year until Friday. Amid regional weakness in equity prices and investors generally apparent aversion towards equity, the Malaysian equity market may be bucking the trend as far as foreign money flow is concerned, he said. Foreign investors were snapping up Malaysian equity in the open market on Bursa Malaysia last week with RM134 million net amount purchased, which was relatively decent for a four-day week. Foreign investors had been selling in the preceding five consecutive weeks, offloading RM1.68 billion net during the period. Foreign investors were net buyers in three out of the four trading days last week. The damage was on Wednesday when there was global selloff after the International Monetary Funds growth downgrade. Still, the amount sold was small, only RM2.2 million, said Zulkifli. On cumulative basis, foreign investors remained net sellers of Malaysian stocks in 2014, and the net outflow as of last Friday was RM3.25 billion. In 2013, Malaysia reported a net inflow of RM3.0 billion. Foreign participation rebounded to elevated (more than RM1 billion) last week after being in the moderate bracket (RM750 million - RM1 billion) in the preceding two weeks. Daily average gross purchase and sale rose to RM1.01 billion. Meanwhile, brave opportunistic retail investors are busy mopping up shares at knocked-down prices. Retailers bought a strong RM178 million, the highest in a week this year. Retail participation (average daily gross sales and purchases) was still moderate at RM942 million, as most players stayed on the sideline assessing the situation. Local institutions were bearish, having sold RM312.3 million last week. Participation rate remained elevated at RM2.4 billion, indicating plenty of trading activity by the local fund managers, said Zulkifli. He said Budget 2015 which was tabled last Friday, is unlikely to reverse the trend as risk aversion towards equity is too high globally, with no rebound in the bellweather market on Friday, after the sell off on Thursday. However, the fundamentals of the ringgit are expected to be strengthened with the continue improvement of the federal governments finance while the bulk of the volatile portfolio money has already left the country since May 2013. The process has been rather orderly, which is positive for the market. We remain positive on the long-term fundamentals of Bursa. | #saham | #market | #fbmklci |
Posted on: Tue, 14 Oct 2014 04:15:00 +0000
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