FBM KLCI – is expected to continue its downtrend this week
By Sharen Kaur
THE FBM Kuala Lumpur Composite Index (FBM KLCI) is expected to continue its downtrend this week as uncertainty in the eurozone coupled with concerns on the global economy temper risk appetite.
The Business Times reported that analysts are expecting profit-taking activities to continue this week and some investors to adopt the wait-and-see attitude.
There is weak buying momentum on the stock exchange at the moment and this has led the FBM KLCI index falling below the 1,580 support level,” they said.
The index lost 24.05 points to 1,567.80 last Friday.
Underperformance in heavyweights like Maybank, YTL, MMC and Sime Darby dragged the local benchmark lower last week.
The analysts said the heavyweights were not able to rally despite a series of positive news from the US such as a possible stimulus plan.
“Confidence is extremely fragile, and uncertainty high, because of the eurozone economic conditions which deteriorated in April. Debt concerns seem to be back in focus,” said an analyst.
Confidence in the euro region declined more than economists had forecast in April, as the region’s slump showed signs of deepening.
According to the European Commission in Brussels, an index of executive and consumer sentiment in the 17-nation euro area fell to 92.8 from a revised 94.5 in March.
“Asian stocks sank deeper into the red due to selling pressure in the wake of renewed uncertainty. Malaysia could not escape the turmoil,” an analyst said.
“We advise investors to buy cautiously. A few good stocks to look at include CIMB; because of its better first quarter earnings where profits jumped 29 per cent, and Nestle; which has pipeline investments.
“The other good stock would be DRB-HICOM, which recently picked up a 98.6 per cent stake in Proton,” the analyst added.