(Updated)

KLCI ends lower after rising ahead of Budget 2022 announcement

KLCI ends lower after rising ahead of Budget 2022 announcement
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KUALA LUMPUR (Oct 22): The FBM KLCI closed down 3.54 points or 0.22% at 1,588.08 on Friday (Oct 22) on profit-taking after rising in recent days ahead of Malaysia's Budget 2022 announcement on Oct 29, 2021.

On Friday, the KLCI closed down as investors also took cues from prices of commodities including crude oil which fell in tandem with lower prices of coal after China indicated it would curb rising prices of coal to support electricity producers amid a widespread power-supply crunch.

Speaking to theedgemarkets.com, UOB Kay Hian Securities (M) Sdn Bhd head of retail research Desmond Chong said: "Overall market breadth continued to be negative and in profit-taking mode after a decent albeit premature run ahead of the Budget 2022 announcement."

"(Across Bursa Malaysia) healthy correction was observed across the banking, plantation, construction and property (sectors). With the lack of rerating catalysts especially on the heavyweight KLCI component stocks, we expect the KLCI to remain sideways.

"Beyond here, we believe the economic reopening theme could continue to gain traction following the rotational switch towards value stocks (from growth stocks)."

On the technical side, Chong said the KLCI's immediate support level is seen at 1,582.

He said should the index fail to hold above its immediate support level of 1,582, further downside could be seen at between 1,560 and 1,582.

Across Bursa, 3.07 billion securities worth about RM2.18 billion were traded on Friday as 597 decliners outnumbered 410 gainers.

Top decliners included ViTrox Corp Bhd and Press Metal Aluminium Holdings Bhd.

The most actively-traded counter was Serba Dinamik Holdings Bhd which saw 105.18 million shares changing hands after its share price settled down two sen or 5.41% at 35 sen at Bursa's 12.30pm break.

Bursa said in a statement on Friday the bourse regulator "has resolved" to suspend the trading of Serba Dinamik securities including all structured warrants relating to the company from 2.30pm on Friday until further notice in the interest of maintaining an orderly and fair market in the trading of Serba Dinamik securities.

On the upcoming Budget 2022 announcement, Chong said UOB Kay Hian expects the Budget to be "modestly expansionary" and "market-neutral".

He said UOB Kay Hian believes emphasis could be placed on, among others, building resilience within the B40 income group besides incentives for the tourism sector.  

Globally, markets took cues from prices of commodities including crude oil which fell in tandem with lower prices of coal after China indicated it will curb rising prices of coal to support electricity producers amid a widespread power-supply crunch.

It was reported that crude oil prices hit multi-year highs earlier in the week on concerns about global coal and gas shortages which spurred fuel-switching to diesel and fuel oil for electricity generation.

Aluminium prices also fell on Friday. "Shanghai aluminium prices hit their limit down on Friday to their lowest in over a month as tumbling Chinese coal prices eased concerns of disruptions to metal supplies and forced selling in some commodities,” Reuters reported.

Chong Jin Hun