Market Reports

Being the worst performer within the region the FBM KLCI (-5.25% year to date) is fairly well supported at the 1,600 mark amid the prevailing market volatility. With the MYR now at RM4.20/USD, the local bourse presents an alluring value proposition especially for foreign investors.
We continue to advocate market participants to look at index linked stocks as these would be the first to rebound once the market sees a reversal in fortune. We estimate that the FBM KLCI is currently trading at a PER of 15x which is below its average of 16.5x hence the window of opportunity for stock accumulation.

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The on-going trade tension between US and China continues and now seems like “technology war” as can be seen with the announcement last week the US president signed an order that could restrict Chinese telecommunications companies from selling their equipment in the United States.
This will have an impact on the sentiment on tech related stocks in Bursa Malaysia. Hence it presents buying opportunity amidst the share price weakness which is more palatable now.

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We believe regional markets are set to remain volatile so long Trump maintains his “bullying: stance against China and the rest of the world. Recent developments on Huawei sets the tone for other Chinese companies which would create continuous uncertainties surrounding the 2 largest economies as US companies may also be impacted.
As for the local bourse, we reckon prevailing consolidation to persists with the lack of catalysts. Psychological support is seen at the 1,600 mark for the FBM KLCI.

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Major markets ended on negative territory last week following the escalating trade tension between US and China. The major Asian markets declined while the Dow Jones Industrial Average index advanced 1.7% or 439 points. Meanwhile, the FBM KLCI closed 0.27% higher to end the week at 1,605.36 points.
Weekly foreign funds flow continued with RM1.18bn net outflow pushing YTD outflow to over RM4.49bn. Performance amongst the FBMKLCI components saw 14 gainers to 13 losers.
Top 3 performers include DIALOG (+7.14%), TOP GLOVE (+5.78%) and HARTA (+5.59%) while the top 3 losers were SIMEPLT (-4.68%), AIRPORTS (-1.90%) and MISC (-1.65%).

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Crude oil price strengthened to USD72.80/barrel as tension in the Middle East escalates. Crude oil price have had gained by more than 35% year to date from USD53.80/barrel as at beginning of the year.
If prevailing price is sustainable, we reckon more crude oil related jobs could be in the offing hence should boost the O&G players. Companies like Dialog, Hibiscus, Dayang, Uzma, Serba Dinamik and Straits Inter Logistics are some of our favourites.

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