KLCI falls as analysts warn of weaker technical signs

KUALA LUMPUR (Jan 13): The FBM KLCI settled down 3.04 points or 0.19% at Bursa Malaysia's afternoon break today on profit taking after analysts warned that Malaysian shares have been showing weaker technical indicators amid geopolitical uncertainties.

At 12:30pm, the KLCI settled down at 1,588.42 after rising to its highest so far today at 1,595.24. Globally, markets have been taking cue from the US-Iran conflict and proposed signing of the phase one trade deal between the US and China.

In Malaysia, TA Securities Holdings Bhd wrote in a note today: "Given the deteriorating technical trend and momentum indicators following last week's correction, stocks are likely to extend sideways trade with downward bias as trading momentum weakens."

"The softer global crude oil prices will also see oil and gas-related counters ease back into consolidation mode, pending more upside catalysts ahead. Expect the recent choppy trading to persist as global geopolitical uncertainty remains elevated," TA Securities said.

Hong Leong Investment Bank Bhd wrote in a note today that given the negative technical readings on Malaysian shares, Hong Leong expects the market's sideways consolidation to persist over the near term despite the US-China phase one trade deal that will be signed on Wednesday (Jan 15).

"In the meantime, traders would be trading plantation stocks on the back of better expectations in the upcoming February reporting season. The KLCI is likely to trend between 1,580 and 1,620," Hong Leong said.

Globally,Reutersreported today that Asian shares rose to new 19-month highs on Monday ahead of the expected signing on the phase one China-US trade deal, although markets have yet to see the details of the agreement.

"The main event of the week will be the signing of the phase one trade deal between the US and China on Wednesday. The Trump administration has invited at least 200 people to the White House for the ceremony," the newswire reported.