The downtrend on Bursa Malaysia is likely to continue next week with the recent massive sell-off in regional markets on increasing concerns over a global economic slowdown, dealers said.
This is in also in view of recent poor economic data from the United States (US) and expectations of a prevailing weak US jobs market which points to the prospect of a double-dip recession.
Affin Investment Bank, head of retail research Dr Nazri Khan said going forward, the FBM KLCI will continue its slide and test the crucial psychological 1,500 support level, on the back of negative economic signals and expectations of a double dip recession in Western markets.
He said this week's dismal performance is the fourth consecutive weekly loss for the FBM KLCI with the index falling 76 points or 4.7 per cent since the mid-July peak after crossing down the psychological 1550 support level last Monday.
Nazri said investors are becoming increasingly concerned that the attempt by governments to tackle the debt crisis will not resolve problems but only exacerbate the economic slowdown.
"As for strategy next week, we are recommending that our aggressive investors hold the short position in index futures. Conservative investors should stick with defensive asset class (such as high yield utilities and bonds) and increase their cash positions," he added.
US stocks on Thursday suffered their worst sell-off in two years and analysts are expecting further correction in the coming week, according to foreign news reports.
The ongoing European debt crisis also continued to plague global markets.
During the week, the local bourse was choppy, with the market recovering from three trading days of losses on Monday in tandem with firmer regional bourses.
This followed news that US congressional leaders have agreed to raise the debt limit and cut government spending to avoid a potentially disastrous default.
However, the local bourse lost its momentum on Tuesday, on continued weaknesses in regional markets, spooked by concerns of a slowdown in global manufacturing activities amid weak US economic reports.
On Friday, Bursa Malaysia ended sharply lower,in line with massive losses in regional markets with the benchmark FBM KLCI plunging 22.46 points to 1,524.43, the lowest since May 10 this year.
On a Friday-to-Friday basis, the FBM KLCI declined 24.38 points to 1,524.43 from 1,548.81 previously.
The Finance Index lost 138.46 points to 14,489.15 from 14,627.61 on last Friday.
The Industrial Index declined 69.50 points to 2,758.24 on Friday from 2,827.74 previously while the Plantation Index lost 143.26 points to 7,592.94 from 7,736.2.
The FBM Emas Index decreased 204.49 points to 10,478.30 from 10,682.79 last Friday.
Total weekly volume increased to 6.020 billion shares worth RM9.858 billion from 5.13 billion shares worth RM8.07 billion last week.
The main market turnover increased to 4.089 billion shares worth RM9.53 billion from 3.6 billion shares worth RM7.84 billion last week.
Volume on the ACE market increased to 1.38 billion shares valued at RM236.207 million from 999.5 million valued at RM277.46 million last week.
Warrants decreased to 481.029 million shares valued at RM71.227 million from 494.04 million shares valued at RM96.7 million last week. -- Bernama