WEEKLY MARKET ANALYSIS BY MANOKARAN MOTTAIN
Profit taking kicked in last week as the local stock market fell throughout the holiday shortened week. The benchmark KLCI Index fell 1.80% to end the week at 1,424.17 points on the back of selling by the institutional and foreign funds.
Given the fact that the KLCI Index has breached its immediate support line of 1,430 points, its next trading range would be between the 1,400 and 1,430 points range.
Trading volume and value has also been progressively lower as investors take a more cautious view ahead of the tabling of Budget 2024 on 13 October 2023.
I expect Budget 2024 to contain measures to support the M40 and B40 segments with their cost of living challenges as well as gradually raise their incomes through the progressive wage system.
I don’t expect major changes to the existing corporate or personal income tax rates but it is very likely the capital gains tax for unlisted equities will be introduced in 2024 after having been raised before.
A lot of focus will also be on the amount of development expenditure which will be the key to boost the economic growth activities in the future.
Bond yields in the US continue to push higher over the past week with the UST 10-year yields rising further to 4.58% but the 10-year MGS bond yields continued to stay put at around 3.97% which further widens the negative yield differential between the 10-year MGS and UST to 62 points. This means that either the UST bond yields will have to come off or the MGS yields start to rise to close the negative yield gap.
The Ringgit continued to remain relatively flattish against the major currencies over the past week.
The Ringgit weakened slightly against the US Dollar over the past week to RM4.6940 but I am maintaining my view that RM4.70 remains the upper limit over the near term unless the US Federal Reserve continues to hike the Federal Funds Rate further.
As such, I am keeping my expected USD-MYR range of between RM4.65 – RM4.70 in the coming week. - DagangNews.com
Manokaran Mottain is an economist with many years of experiences with a number of financial institutions and is now managing his own firm, Rising Success Consultancy Sdn Bhd and has been writing his economic analysis on a weekly basis in DagangNews.com since 2022.
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