Daily Market Reports Issued By Rakuten Trade Research : Page 238

The tit for tat developments between the US and China on trade tariffs continue to be the main focus for global equity markets which is not going to end anytime soon. As such we may see continue market volatility with more downward bias.
Domestically, the FBM KLCI is supported at the psychological 1,600 level with the next support is seen at the 1,570 mark. Meanwhile, there is a likelihood that China may abandon the import of soya oil and look to crude palm oil (CPO) as the alternative thus providing certain support for the CPO prices in the short term.

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US tariff hike of 25% on China has kicked in last Friday on US$200bn worth of Chinese imports. Markets will continue to be volatile and is reacting to the headline news or tweets as evidenced by the rebound on Dow Jones from 359 points loss to close 114 points higher last Friday to 25,942.37.
Larry Kudlow, Donald Trumpâ€™s economic adviser said there is a â€œstrong possibilityâ€ that Trump will meet Chinese President Xi Jinping at G20 summit in late June. Our view is that it is trading market for now and there are opportunities to selectively buying and follow our technical reports.

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Major markets ended on negative territory last week following the escalating trade tension between US and China. The Dow Jones Industrial Average index declined 1.9% or 496 points while Hong Kongâ€™s Hang Seng Index lost 2.3% or 660 points.
Meanwhile, the FBM KLCI closed at 1,610.27 points, indicating a weekly loss of 1.4%. Weekly foreign funds flow continued with RM450.2m net outflow pushing YTD outflow to over RM3.3bn. Performance amongst the FBMKLCI components saw 26 losers to 4 gainers.
Top 3 performers include GENM (+1.27%), PCHEM (+1.02%) and PETDAG (+1.00%) while the top 3 losers were AXIATA (5.39%), AIRPORTS (-5.17%) and IOI CORP (-4.72%).

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Massive knee jerk reaction is happening all over the place mainly thanks to Trumpâ€™s bullying tactics. As mention numerous times, we remain positive and would use these as an opportunity to accumulate on blue chips.
Banking stocks have had been sold down of late due to the cut in OPR coupled with the continuous exodus of foreign funds thus we believe it is excellent chance to look at banks namely Maybank, Public Bank, CIMB and Hong Leong Bank.

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It is going be a volatile few days for equities and the Ringgit in view of the US tariff warning on China and the recent reduction in our OPR (overnight policy rate). Nonetheless, we remain positive on the equity market primarily due to the â€œpushâ€ by the government as seen recently.
We believe the government is now seriously looking to improve the ailing domestic economy and that the impending implementation of the mega projects as to kickstart their initiatives and expect more in the offing.

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