Bursa closes at record high

Published: Thursday October 24, 2013 MYT 12:00:00 AM 

Updated: Thursday October 24, 2013 MYT 8:26:48 AM

BY IZWAN IDRIS

PETALING JAYA: Share prices in Malaysia, Thailand and Indonesia defied gravity to post solid gains even as developed markets in Japan, Hong Kong and South Korea took a tumble as investors switched their attention to fast-growing companies in emerging Asia.

The FTSE Bursa Malaysia extended its unbeaten run to six days in a row yesterday to close at an all-time high of 1,814.11 points. The ringgit halted a three-day decline to close 0.1% higher at 3.1677 against the US dollar.

The ringgit had strengthened 2.9% so far this month and ranked among Asia’s best performing currencies in October. The advance mirrored the US dollar weakness against most major currencies amid growing expectation that US Federal Reserve will delay reducing its stimulus programme that is spurring investors to buy emerging market assets.

But some analysts are not at all convinced that the Malaysian equity market is attracting a lot of foreign inflow at this stage.

“Foreigners have been selling,’’ said MIDF Research head Zulkifli Hamzah, who publishes a weekly report on the flow of foreign funds in the local equity market.

“Malaysia bucks the trend,’’ he told StarBiz yesterday.

Foreign funds were net sellers on local equities for the past two weeks, MIDF Research said in its latest report, which the firm viewed as a reflection of some apprehension by foreign investors ahead of the budget.

Prime Minister Datuk Seri Najib Tun Razak, who is also the finance minister, will table the budget in Parliament tomorrow. He is expected to announce fresh measures to boost income, including the implementation of the goods and services tax (GST) in 2015 and cut wasteful spending that may include further reduction in subsidies.

Last month, the Government raised petrol and diesel prices at local pumps for the first time since 2010.

“Under the current scenario, an unflinching commitment with affirmed timelines by the government to fiscal consolidation, as per the public finance reform initiatives, may turn out to be the key to continue winning investors’ heart,’’ MIDF Research’s head of equity Syed Mohammad Kifni wrote earlier this week.

The firm maintained its year-end target for the FBM KLCI at 1,800 points and at 1,900 points for 2014.

It would seem that the benchmark had overshot its near-term target, but with the third-quarter earnings season just starting, there will be some room for a re-rating, at least for companies that can deliver.