KUALA LUMPUR – Bursa Malaysia is expected to trend lower next week in line with the global stock market performance as investors remained cautious over escalating US-China trade tensions.

Hermana Capital Bhd Chief Executive Officer and Chief Investment Officer Datuk Dr Nazri Khan Adam Khan said trade tensions between two of the world biggest economies was getting serious and could trigger the second round of tariff war worth US$50 billion anytime.

“We expect the market will go lower with support set at 1,660 while resistance is at 1,700,” he told Bernama.

The first round of US tariff imposition on US$34 billion of Chinese imports kicked off yesterday and Beijing responded by imposing a tariff rate of 25% on US goods, equalling Washington’s rate on Chinese imports.

Domestically, Nazri Khan said the stock market’s technical data and fundamentals remained weak with a lot of news that emerged to discourage foreign investors to come in.

“There are a lot of stories (that) came out that we’ve never heard before and more are going to be dug up. Some of this would surprise investors,” he added.

He said foreign outflow continued this week after a reversal last week as foreign investors continued to take a cautious stance.

“There is no sign that foreign fund is firming up,” he said.

For the week just-ended, the local bourse trended mostly lower, tracking regional peers, on cautious sentiment on global trade tensions.

On a Friday-to-Friday basis, the benchmark FTSE Bursa Malaysia KLCI was 27.65 points easier at 1,663.86 from 1,691.5 in the previous week.

The FBM Emas Index fell 161.94 points to 11,798.99 and the FBMT100 Index shed 162.69 points to 11,595.24.

The FBM 70 declined 92.35 points to 14,534.71 and the FBM Emas Shariah Index lost 129.25 points to 121,963.3.

The FBM Ace was 106.65 points higher at 5,234.18.

On a sectoral basis, the Finance Index dipped 309.01 points to 16,340.9, the Plantation Index fell 112.78 points to 7,421.38 and the Industrial Index was down 39.91 points at 3,087.62.

Weekly turnover widened to 10.05 billion units worth RM8.36 billion from 9.70 billion units worth RM10.52 billion previously.

Main market volume expanded to 5.99 billion shares valued at RM7.01 billion from 5.90 billion shares valued at RM9.53 billion.

Warrants turnover contracted to 2.64 billion units worth RM817.89 million from 2.75 billion units worth RM814.09 million in the previous week.

The ACE market volume decreased to 1.40 billion shares valued at RM290.52 million from 2.58 billion shares valued at RM178.25 million.

Gold futures contract on Bursa Malaysia Derivatives is likely to trend higher next week amid the escalating trade tension between the United States and China.

A dealer said the trade dispute had dampened investors’ risk appetite, prompting them to shift towards gold as the precious metal was traditionally seen as the safe-haven asset amid political and financial uncertainties.

“Besides, the trade spat has led to a softer dollar which supported gold prices on the global front as the precious metal became cheaper for foreign investors,” he said.

However, the local gold futures performance would be influenced by the ringgit’s movement as a stronger ringgit against the greenback would make gold less attractive to international traders.

On a Friday-to-Friday basis, July 2018, August 2018, September 2018 and October 2018 rose eight ticks each to RM164.00, RM164.20, RM164.50 and RMRM164.50 a gramme, respectively.

Weekly turnover dipped to four lots, valued at RM65,320, from 14 lots, worth RM228,615, in the previous week while open interest was lower at 24 contracts from 51 contracts last Friday. — Bernama

Ringgit to trade at 4.02-4.05 against US dollar next week

KUALA LUMPUR: The ringgit is expected to trade between 4.02 and 4.05 against the US dollar next week after the US-China tariffs dispute kicked off on Friday, coupled with the likelihood of further US interest rate hikes this year.

FXTM Global Head of Currency Strategy and Market Research, Jameel Ahmad, said emerging market currencies, including the ringgit, were a threat to lose further ground from the prolonged cautious environment.

“This could expose the ringgit to more losses as a result of less risk appetite, and the local note could slide towards the 4.05-level,” he told Bernama.

Meanwhile, Oanda Head of Trading Asia-Pacific, Stephen Innes, expected the ringgit-US dollar to trade with a neutral bias next week, within the 4.02-4.05 range, supported by the local bond market which was neutrally traded in the previous week.

“It does feel like the market is finally waking up from a two-month slumber,” he said.

However, Innes said the market was also awaiting more investment direction from Bank Negara Malaysia’s Monetary Policy Committee (MPC) meeting on July 11, 2018, which he said could lean towards a dovish stance.

“A more dovish MPC, along with a strong US dollar could keep the US dollar-ringgit trading defensively next week again.

“But the currency pair will be hard pressed to take out the 4.05 level,” he added.

For the week just-ended, the local note was traded between 4.0350 and 4.0470 versus the greenback, mainly influenced by the US-China trade friction, as well as the releases of minutes of the US Federal Reserve’s June meeting and the US non-farm payrolls data.

On a Friday-to-Friday basis, the local note finished unchanged against the greenback at 4.0380/0420 from 4.0380/0410.

The ringgit was traded lower against a basket of major currencies.

It weakened against the Singapore dollar to 2.9672/9712 versus 2.9624/9650 last Friday and fell against the yen to 3.6497/6536 from 3.6487/6524.

The ringgit declined vis-a-vis the pound to 5.3419/3476 from 5.3092/3147 and depreciated against the euro to 4.7277/7340 from 4.7043/7082.

— Bernama