Sunday, March 16, 2008

KLSE - Volatile Trading Ahead

KLSE is filled with an air of uncertainty arising from both internal and external sources. On the domestic front, the dust of the political tsunami is still not settled yet, thus giving players a deep sense of caution. Externally, the bearish sentiment is intense, taking investors and punters alike to the sideline.

The precarious scenario is expected to persist in the trading week to come. Therefore, any news not favourable to the local trading sentiment would very likely send the market nerve-racking.

On Friday, Dow Jones broke through the psychological barrier of 12,000 to close at 11,951.09 points, down by 194.65 points. This fall is expected to impact the worldwide market on Monday's trading with downcast sentiment, giving added sell-down pressure.

Two events of profound significance to Bursa Malaysia in the coming week are noteworthy by market players. Firstly, Pak Lah shall lay out to the nation his new cabinet line-up. Secondly, the America's Federal Reserve Open Market Committee shall have a sitting on March 18 to deliberate on its rate policy with the view to revamp the slow moving economy.

New faces are anticipated to show up in the new cabinet. I don't expect them to excite the market much. But if the new line-up is of high calibre, the nation shall stand to benefit in the medium to long-term. The depressed sentiment arising from the political turmoil is not expected to dwindle away yet.

The market talk is that the FOMC sitting on March 18 would very likely see another slash of 0.75% to the rate to spur on the economy. Last week, this optimistic expectation might already have been integrated into the market. Therefore, if the actual cut falls short of the expectation, the market worldwide would slip in response to it.

In view of the anticipated local and external factors ruling the local market, it would be prudent for players to take extra caution to trading.

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