The uncertainty surrounding the US fiscal cliff, leadership change in China and escalating violence in West Asia are expected to dampen trading on Bursa Malaysia next week.
Vice President/Head of Retail Research, Affin Investment Bank, Dr Nazri Khan, said the local market, which closed below the strong 1,630 support level, was expected to weaken next week.
"We believe the logical downside objective will be 1,620 and 1,600 level while the next area of resistance is 1,630 and 1,650 level," he said.
Nazri said there were signs the US politicians may face stiff challenges to put the country’s public finances in order by January and may not have the resource to reach a budget compromise in a timely fashion.
"Failure to avoid the fiscal cliff will result in sovereign rating downgrade and possibly push the US into a mild recession again," he said.
Meanwhile, he said, the European shares were under modest pressure in response to a worse-than-expected European industrial production.
He said there were also signs of cautiousness in the region following leadership change in China.
The new leaders, he said, may not be reform-oriented leaders to support Chinese equities.
"The fact that the Shanghai Composite was down to a six-week low suggested that the Chinese stocks received no boost from the leadership change," he said.
For the week just-ended, the FBM KLCI fell by 11.8 points to 1,629.28 from 1,641.08 last week.
The Finance Index fell 51.46 points to 15,016.91, Industrial Index shed 35.59 points to 2,789.68 and the Plantation Index eased 50.36 points to 8,022.5.
The FBM Emas Index declined 64.74 points to 11,131.74, FBMT100 was 66.27 points lower to 10,967.45, FBM ACE Index eased 23.95 points to 4,275.65 and the FBM 70 Index slid 12.33 points to 12,274.89.
Weekly turnover fell to 2.56 billion shares valued at RM4.58 billion from 5.375 billion shares valued at RM7.632 billion last Friday.
The Main Market volume decreased to 2.02 billion units worth RM4.51 billion from the 4.079 billion units worth RM4.079 billion previously.
The ACE market volume eased to 351.76 million shares valued at RM55.18 million from 900.435 million shares valued at RM63.676 million last week.
Warrants fell to 183.32 million units worth RM12.37 million from 387.431 million units worth RM32.898 million last Friday. -- BERNAMA
Read more: External factors likely to dampen KL shares http://www.btimes.com.my/articles/20121117111443/Article/#ixzz2CSniT1tC