Malaysian share prices are expected to consolidate in the week ahead with investors remaining on the sidelines in the wake of a sell down and shaky regional markets, dealers said.
They said the market slumped during the week as sentiment took a beating on fresh inflationary concerns, steep falls in commodity prices, and volatile regional markets.
"Most investors will stay on the sidelines awaiting for the market to find stability and a bottom before re-entering the market," said Victor Wan, a senior analyst with Mercury Securities.
"This will also leave the current downtrend intact for the near term and hamper efforts for the market to undertake a swift recovery," he said. "With the consolidation likely to persist, investors will be fishing a bottom, which, for now, is pegged at around the 935 to 938 levels."
Wan said the consolidation would persist and a recent up trend would be undone if the levels failed to hold.
Inflation continued to run high, registering at 4.6 percent for April in figures released during the week, and Wan said the trend would continue for the next few months.
"Most economists are predicting further interest rate hikes within the next few months to combat inflation," he said.
Malaysia's central bank chief hinted on Thursday that there was more room for another interest rate rise, saying that three hikes over the past six months have not hurt the economy.
Amid speculation that the Bank Negara's monetary policy committee could try to combat high inflation with another rate rise after its May 22 meeting, Zeti Akhtar Aziz said the rate adjustments so far had not hurt consumer spending.
For the week ending May 19, the Kuala Lumpur Stock Exchange composite index shed 21.65 points, or 2.24 percent, to 944.40.
Average daily volume was 1.14 billion shares worth 1.45 billion ringgit (399.67 million dollars) compared to 1.94 billion shares worth 1.98 billion ringgit in the previous week.
At the close, the ringgit was traded at 3.6180 to the US dollar and 4.6153 to the euro.
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