Malaysian stocks are expected to continue firmer this week but gains may be modest as the market reverts to trading within a narrow range after its recent advance to 930 points, dealers said. They said underlying interest remains solid, with perhaps a speculative element at work on currency factors after former premier Mahathir Mohamad called for the ringgit peg to be ended.
Many believe that course would see the ringgit rise sharply.
For the holiday-shortened week to January 20, the Kuala Lumpur Composite Index fell 4.38 points or 0.47 percent to 929.72. The markets were closed Friday for a public holiday. Trading will resume Monday.
Average daily volume for the 4-day week was 683 million shares worth 1.185 billion ringgit (312 million dollars) after 605 million shares worth 1.18 billion ringgit the previous week.
Victor Wan, senior analyst with Mercury Securities, said that "despite the generally range-bound trend ... market interest is still firm."
The market is "expected to drift in a 921-935 points level," he said, adding that 950 points remains "a reasonable short-term target."
Wan said he expected the government to retain the country's currency peg with the US dollar to ensure economic stability.
"The incessant speculation over the ringgit's re-pegging was one of the recent market catalysts," he noted.
"However, the hopes were doused when (the central bank) governor indicated that only structural changes would prompt a re-pegging and not a single currency's movement," he said.
The ringgit was pegged at 3.80 to the dollar in September 1998 as part of capital controls amidst the Asian financial crisis.
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