KUALA LUMPUR: The stock market may be on a downtrend this week as investors lock up gains they made over the recent weeks as well as continuous fears on the US and Europe economies.
Although analysts believe there may be some key announcements that may push the market upwards this week, the overall sentiment is expected to remain bearish over the short-term.
"Overall, we are expecting the market to be poor over the near term. The fundamentals have not changed. US is still expected to register a slow growth, and crisis in eurozone is expected to continue," said Chris Eng, head of research at OSK Research Sdn Bhd.
Analysts expect the market to be trading around 1,420 to 1,450 this week. News flow from the US, eurozone, as well as China is expected to be the main market drivers this week.
According to news reports, the plan taking shape among eurozone countries to address the crisis is built on three central elements: a new bailout for Greece; an effort to shore up the banks affected by Greek losses and potential future losses from other troubled eurozone countries; and additional firepower for the European Financial Stability Facility, the bloc's bailout fund to provide a reassuring backstop.
The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBMKLCI) fell by 0.17 per cent or 2.44 points to 1,442.43 on Friday. For the week, it gained 3 per cent, or 42.38 points.
The market, which hit its peak at 1,594.74 points early July, fell to as low as 1,331.80 points late September. Year-to-date, the benchmark index fell by 5.04 per cent.
This week, banking stocks are expected to be on investors' radar, especially RHB Capital Bhd and OSK Investment Bank Bhd, which received green light to start talks of a possible merger.
Malaysian Resources Corp Bhd, having clinched a RM46.5 million deal to undertake the remaining 200m construction of a drainage system in Kuala Sungai Pahang, is also likely be on the watch list.
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