According to BofA Merrill Lynch Fund Manager’s survey, Malaysia and Taiwan was the two least preferred market in the global emerging stock market. Indonesia with an expected GDP growth of 6% in 2010 is the third most preferred emerging market.
Despite unfavorable view among the global fund managers, the local bourse has registered impressive gains. The medium term bullish local bourse as shown last week was not followed by increasing volume and the ringgit movement is not reflected by the stock market moves. It seem that the current equity market is being supported by local fund managers especially the government sponsored funds such as EPF and Khazanah.
With PM Najib striving for major projects to push the economy, a depressed ringgit will boost FDI and also the local stock market. It was being said that the recent price hike of fuel and sugar will save some funds to the government and the fund will be used to finance one his major project.
Tengku Razaleigh did stated this week that there is no check and balance in Najib administration, therefore financial irregularities such that has happened in FELDA and Sime Darby occurred occasionally. Giving that scenario, I am expecting some leakage from the subsidy saving by hiking the fuel and sugar price .
The local bourse as represented by FBM KLCi showed a 7 days upward moves before registering a loss on Thursday. The Index rebound slightly on Friday.
With a potent move in two weeks that carried the Index passed the previous high of 1335 and a golden cross between the 20 and 50 EMAs, the immediate trend is a continuation bullish tone.
Stochastic Indicator is at o/B position and MACD at positive position and above the trigger line. This week I am looking for a correction in the local burse with major support at 1317.
