Malaysian share prices are expected to move sideways amid economic uncertainties as it awaits news of a possible US interest rate cut, dealers said on Friday.
They said during the week, investors picked up bargains in select index-linked stocks such as property and construction following the recently-announced national budget for 2008.
Looking ahead, dealers said the local market's performance next week will hinge on the outcome of the Fed meeting on September 18 to decide on interest rates. "If the Federal Reserve does not cut interest rates by 25 basis points as expected, global markets will react badly next week," said Gerald Ambrose, managing director at Aberdeen Asset Management.
But the recent spike in crude oil prices might have created a dilemma for the central bank, he said. There are heightened worries that the global economy may be heading to a state of stagflation - where growth is slowing and inflation is rising, he said.
Ambrose, however, said the outlook for the Malaysian economy remains bright but the local bourse will continue to trade off external factors until the global credit problems was resolved.
For the week to September 14 the Kuala Lumpur Composite Index lost 15.4 points or 1.2 percent to 1,289.50 points. Average daily volume fell to 851.86 million shares valued at 1.28 billion ringgit (366 million dollars) during the week, from 862.89 million shares worth 1.32 billion ringgit a week earlier.