rakuten trade market reports : Page 23

We laud Bank Negara’s (BNM) move to cut the Statutory Reserve Requirement (SRR) by 0.5% which will release around RM7bn to 8bn into the system. We are strong advocate for such move as this will be a more effective instrument than the usual cut in interest rates.
By doing so, BNM is able to maintain attractive yields in Malaysia which should attract more foreign funds flowing into the country as depicted from the recent strengthening of the Ringgit.
Additionally, such a move should be positive for the Banks and we expect buying interests on the banks to continue. As for the FBM KLCI, we anticipate it to challenge the 1,620 mark today.

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Major global indices were on positive territory last week on the encouraging US-China trade war development. US stock markets continued to chart record highs. On the local front, the FBM KLCI settled the week above key support level of 1,600 to end at 1,609.
Weekly foreign funds however turned negative, posted net outflow of RM237.2m with year-to-date net outflow of RM8.6bn. Losers of 15 outnumbered 14 gainers in KLCI last week.
Top 3 performers were AIRPORT (+4.30%), GENTING (+4.19%) and AMBANK (+2.99%) while the 3 losers were TOP GLOVE (-3.76%), HARTA (-3.43%) and IOI CORP (-1.81%).

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Anticipation of a positive outcome from the US/China talk further fuelled optimism on the equities markets. China’s stocks also soared following MSCI’s expansion of its weighting on Chinese stocks with foreign shareholding now at record high of around USD255bn.
As foreign funds are making a comeback into Asia, it is only natural that Malaysia will eventually benefit from the spillover effects. Reflecting the improving outlook, our Ringgit strengthened to 4.12/USD currently from almost 4.20 since August.
For today, allow the local bourse to digest yesterday’s uptrend with some intermittent correction. Nonetheless, we expect the benchmark FBM KLCI to climb further ahead with the next resistance seen at 1,620 level.
Time to accumulate on Petronas linked companies that were trashed rather badly YTD plus smallish construction related companies with the likes of Econpile, Vertice, Vizione and Crest Builder.

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Outlook for equities seems like is getting a reprieve over a potential positive outcome from the US/China Trade talk coupled with interest rates staying put during the course of 2019.
However, one must be wary of Wall Street’s recent record-breaking performances as prevailing high valuations now may now be a major impediment for further upside and becoming more susceptible to a slightest of negative news flow.
Therefore, caution may still rule the day and we envisage further uptrend to be rather limited. Locally, the outlook is a tad better from the strengthening of regional currencies especially the Chinese Renminbi now at below the 7.00 mark against the USD.
Following yesterday’s mild correction, we envisage the FBM KLCI to resume with its uptrend and see 1,610 as the immediate resistance level. We continue to look favourably at some of the Banking stocks and construction counters.

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US markets continues its record run on the back of an imminent trade deal with China and global economy seems to be stabilising after a series of interest rate cuts by central banks. Perhaps the worst is behind us as breath of optimism seems to be in the markets.
At the local front, BNM kept interest rate unchanged in a sign that our economy remains on the right track with FBM KLCI remained above the 1,600 level. Meanwhile, our MYR continues to strengthen to RM4.13, all these are pointing to a long- awaited market rally in the making.
Hence, we advocate investors to start accumulating stocks for the catching up rally where our benchmark KLCI is still down 4.96% YTD.

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