rakuten trade market reports : Page 20

Major global indices were in negative territory last week. Hong Kong equities were heavily sold down amid the political uncertainty as the HSI lost 646.5 points to settle at 26,346.5 last week. On the local front, FBM KLCI tumbled 29.6 points to 1,561.4.
Weekly foreign fund flows were negative with a total net outflow of RM761.22m. Year-to-date net outflow hit a massive RM9.9bn. There was only 1 gainer against 28 losers in KLCI last week.
The performer was HLB (+0.84%) while the top 3 losers were PETGAS (-4.91%), PETDAG (-4.18%) and AXIATA (-3.95%).

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Equities market is expected to remain volatile regionally. Nonetheless we expect foreign funds to eye at emerging markets mainly due to prevailing bloated valuations on Wall Street and are hopeful that Asia would be their preferred destination.
On the forex front, we noticed that the Ringgit has also been rather volatile oscillating between 4.12 to 4.17 per USD over the past month suggesting year end re-alignments of funds for the coming calendar year.
On the local front, we continue to anticipate nibblings on local stocks and see the FBM KLCI to nudge closer to the 1,590 level

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Just when one expected a solution from the US China trade discussion, in came party pooper Mr Trump over the sensitive issues in Hong Kong and may jeopardise any potential encouraging outcome. With this latest uncertainty, we foresee more market volatility ahead.
To make matters worse, US stocks are now deemed expensive predominantly propped up by excess liquidity and are extremely susceptible to any market vagaries.
On the flipside, we believe it is a matter of time before foreign funds will make a U-turn back to Asia for value proposition where the local bourse may benefit from some spillover effects. Expect the market to try break the 1,585 mark and re-test the 1,590 level.

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Though Wall Street remains on record levels, movements are still dictated by speculation over the ongoing trade talk between the US and China. Therefore, we believe global markets to remain stuck in prevailing volatile phase.
On the domestic front, following two consecutive sell-downs due to foreign funds outflow we reckon the FBM KLCI to stage a rebound today to cross over the 1,590 mark.
Expect to see some buying interests to return on plantations stocks where CPO prices is still stubbornly above the RM2,600 level plus some Petronas related companies that have been sold down recently.

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We anticipate the local bourse to trend higher today following yesterday’s disappointing performance.
As Wall Street remains rather strong due to flush in liquidity as valuations on US stocks seems a tad rich at current levels hovering at 18x forward PER as opposed to the average of 15x for the DJI Index.
In view of this, we reckon funds may look elsewhere for better valuations and Asia’s emerging markets seems to be good bets. Today, we believe the FBM KLCI to re-test the 1,600 level to break its prevailing consolidation mode.

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