KUALA LUMPUR: Hwang DBS Vickers Research said on Monday, July 12 the local stock market could inch its way up as buying interest returns in the coming weeks.
After tumbling to a trough of 1,294.37 on Tuesday, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) recovered in the subsequent days to settle at 1,324.31 last Friday, a weekly increase of 16.9-point or 1.3%.
The FBM 70 Index was up (by 1.1%) for the week too but the FBM ACE Index lost ground (-0.6%). Daily average volume contracted further to 561.6m shares (from 604.6m units) valued at RM908.8m (RM929.2m previously).
Hwang DBS Vickers Research said coming off from a depleted base, trading activity should rise going forward. And this is typically the case when there is no more external distraction ' such as the FIFA World Cup football tournament which ended early Monday morning ' thus letting investors to shift their focus back to investment matters.
'History also backs up our expectation of stronger trading interest ahead. Daily average trade actually jumped one week, two weeks and one month after the World Cup was over in the preceding two editions, with the most apparent surge seen four years ago.
'Compared to a mean of 527m shares traded every day during the one-month World Cup period (from June 9, 2006 until July 9, 2006), daily average volume leaped: (a) 100% in the following week; (b) 74% in the subsequent fortnight; and (c) 35% in the one month after the World Cup had concluded,' it said.
Note:'' The benchmark index performance was, nevertheless, broadly flattish at minus 1% (post one-week), unchanged (post two-weeks) and +1% (post one-month), respectively.
Hwang DBS Vickers Research said to attract incremental buying interest to local equities, it hopes that last week's favorable overseas vibes would continue.
Regional bourses rebounded last week ' paced by Taiwan (+4.3%), Japan (+4.1%) and China shares listed in Hong Kong (+3.3%) ' as bargain hunters believe that the ongoing market corrections represent a timely opportunity to acquire beaten down shares.
A similar mood was also felt on Wall Street, with its key bellwethers climbing between 5.0% and 5.4% through the week.
Riding on the positive momentum generated in the later part of last week, the FBM KLCI could be on track to advance to 1,340 (the immediate resistance hurdle) soon. A penetration on the upside ' if it happens ' would then lift the barometer towards the next resistance target of 1,375, hence resuming the uptrend that began in mid-March last year.
'Conversely, should the market strength taper off, the first and second support levels will likely be found at 1,305 and 1,280, respectively. Putting things in perspective, the FBM KLCI ' after bouncing up from a short-term bottom of 1,243.86 (on May 27) to 1,324.31 ' is now within striking distance to test the post market rally peak of 1,349.92 (achieved on May 4).
'But as it stands, the benchmark index has yet to break out from a 5''-week consolidation zone bordered by 1,280 and 1,340, although the odds for the FBM KLCI to plot higher highs on the chart is getting slightly better of late. Let's hope for the best,' said the research house.
After tumbling to a trough of 1,294.37 on Tuesday, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) recovered in the subsequent days to settle at 1,324.31 last Friday, a weekly increase of 16.9-point or 1.3%.
The FBM 70 Index was up (by 1.1%) for the week too but the FBM ACE Index lost ground (-0.6%). Daily average volume contracted further to 561.6m shares (from 604.6m units) valued at RM908.8m (RM929.2m previously).
Hwang DBS Vickers Research said coming off from a depleted base, trading activity should rise going forward. And this is typically the case when there is no more external distraction ' such as the FIFA World Cup football tournament which ended early Monday morning ' thus letting investors to shift their focus back to investment matters.
'History also backs up our expectation of stronger trading interest ahead. Daily average trade actually jumped one week, two weeks and one month after the World Cup was over in the preceding two editions, with the most apparent surge seen four years ago.
'Compared to a mean of 527m shares traded every day during the one-month World Cup period (from June 9, 2006 until July 9, 2006), daily average volume leaped: (a) 100% in the following week; (b) 74% in the subsequent fortnight; and (c) 35% in the one month after the World Cup had concluded,' it said.
Note:'' The benchmark index performance was, nevertheless, broadly flattish at minus 1% (post one-week), unchanged (post two-weeks) and +1% (post one-month), respectively.
Hwang DBS Vickers Research said to attract incremental buying interest to local equities, it hopes that last week's favorable overseas vibes would continue.
Regional bourses rebounded last week ' paced by Taiwan (+4.3%), Japan (+4.1%) and China shares listed in Hong Kong (+3.3%) ' as bargain hunters believe that the ongoing market corrections represent a timely opportunity to acquire beaten down shares.
A similar mood was also felt on Wall Street, with its key bellwethers climbing between 5.0% and 5.4% through the week.
Riding on the positive momentum generated in the later part of last week, the FBM KLCI could be on track to advance to 1,340 (the immediate resistance hurdle) soon. A penetration on the upside ' if it happens ' would then lift the barometer towards the next resistance target of 1,375, hence resuming the uptrend that began in mid-March last year.
'Conversely, should the market strength taper off, the first and second support levels will likely be found at 1,305 and 1,280, respectively. Putting things in perspective, the FBM KLCI ' after bouncing up from a short-term bottom of 1,243.86 (on May 27) to 1,324.31 ' is now within striking distance to test the post market rally peak of 1,349.92 (achieved on May 4).
'But as it stands, the benchmark index has yet to break out from a 5''-week consolidation zone bordered by 1,280 and 1,340, although the odds for the FBM KLCI to plot higher highs on the chart is getting slightly better of late. Let's hope for the best,' said the research house.
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