Market Reports

An inverted yield curve means that short-term interest rates are higher than longer-term ones. The inverted yield curve is what happens when investors are bidding for longer-term bonds thus driving down their yields because they are pessimistic about the short-term prospects for the economy.

Many refer such occurrence as a sign of imminent recession. Though we believe a recession will not happen, Trump’s bulldozing tactics globally will certainly create some anomalies within the bond and equity markets.

• The local bourse continues to be hampered by the exodus of foreign funds which has topped RM5.3bn year to date. This was after the RM11.6bn outflow last year.
• As a result, foreign shareholding on the FBM KLCI components has had tumbled from around 17.4% to currently 15.5% which we believe is at one of its lowest level.
• Therefore, though foreign selling may persists, we reckon the pace may be slower going forward. We continue to advocate investors to buy on weakness especially on blue chips.

• Based on the US Treasury semi-annual foreign exchange report, Trump administration has not labelled China as currency manipulator, this is likely to ease some tensions on the on-going trade war between US and China. However, there are five new countries added onto the watch list and this includes Malaysia.
• Our currency MYR has been weakening due to host of factors such as outflow of foreign funds, cut in overnight policy rate (OPR) and highly correlated with Chinese RMB currency. We feel this is unlikely to have any major impact on our equity market.

• Corporate Malaysia so far have had reported a decent set of earnings for the 1Q2019. We noticed that earnings from the banking sector have been within expectations thus far.
• If any, figures from the oil & gas sector were a tad disappointing. As for the others, it is so far so good. As a result, we may not see any major downgrade to our earnings growth forecast which is pegged at 2% for 2019.

• Teo Seng, one of the largest vertically integrated chicken egg players in Malaysia has recently kicked off FY19 on higher note boosted by its poultry farming business. It has a daily egg production of four million and with 40% exports to Singapore and Hong Kong and has a market share of 8% and 19% in Malaysia and Singapore respectively.
• We continue to like Teo Seng due to its intact fundamentals while chart-wise also signalling buying opportunity to accumulate the stock. Refer to our Technical View on Teo Seng Capital Bhd today.