The local stock market is expected to ease during the early part of this week, before regaining its momentum in the second half.


"I think the market will pull back slightly this week. It has gained quite a fair bit recently. We expect some profit-taking," said OSK Research Sdn Bhd head Chris Eng.

The benchmark FTSE Bursa Malaysia KLCI rose 1.5 per cent, or 20.8 points, last week, to end the week at 1335.94. The closing on Friday also marked the index's 10th consecutive days of gain.

Analysts said the gain last week was partly driven by growing investors confidence, after the unveiling of the first stage of the New Economic Model by Prime Minister Datuk Seri Najib Razak.

The gain may also be driven by foreign funds that flowed in to take advantage of the US dollar-carry and yen-carry trades, said analysts.

While profit-taking may happen during the first few days of the week, analysts expect the market to recover.

There will be several growth drivers for the market this week, such as the encouraging export numbers released last Friday as well as merger and acquisition (M&A) speculation.

Exports rose 18.4 per cent from a year earlier to RM46.8 billion, after gaining 37 per cent year-on-year in January.

Nevertheless, the market performance will still be heavily dependent on how the US and regional markets perform.

"I think performance will still largely depend on these big markets. So far, our market has been pretty much in line with these markets," Eng said.

For the week, analysts expect the index's resistant level to be around 1344 to 1349 point level, while the support level to be around 1324-1329 point level.

Analysts also expect banking stocks to climb, backed by better consumer and business sentiment, better margins and M&A activities.

source: Business Times

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