FBM KLCI shrugged off on negative sentiment. The crude oil prices are on a rise and the energy sector stocks are set to fly due to the effect of Global prices. Key regional indices are down spooked by rising US-Iran tensions after a U.S.led air strike killed a top Iranian official.
The U.S. stock markets took a dip from all-time high levels as the Dow sank 0.8% following the renewed geopolitical political tension in the Middle East after Iranian military leader, Qassim Suleimani was killed by a U.S. airstrike. Although the US is trying to justify this killing, the impact on the socio-economic front has been pretty evident.
Due to the political uncertainty in the Middle East, we think that Bursa Malaysia will pullback and thus making it favourable for bottom fishing (Growth potential for Malaysia is expected to be strong for 2020), driven by upbeat domestic demand on the back of recovery in other segments likely manufacturing, mining and agriculture.
Trade and investment activities will rebound as the sentiments have improved after a positive breakthrough in US-China trade negotiations. Ringgit is also expected to rebound and a lower base effect and readily-available capacity will push 2020 growth higher at 4.8%. Also, it has made a strong start of the year and foreign funds still remain in for now. There is panic in the market and the smart investors are ready to take benefit of the situation as there will a minor pull back in the market.
Upsides can be seen in the range of 1,618- 1,623 levels which are the next resistances. The main support, can be seen at 1,560 level.
As the market prepares itself for bottom fishing the rotational plays in energy stocks (like HIBISCS , CARIMIN , ARMADA VELESTO etc) are expected to make a steady upturn as crude oil prices are expected to be positive as oil added to its gains on fears any conflict in the region could disrupt global supplies and this can be beneficial for short-term players and long term investors.
A strong study and detailed strategy will be the key to win the situation on the market.
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