rakuten trade market reports : Page 25

US stocks surged to new highs supported by encouraging results plus expectations of a positive outcome from the US/China Trade talk.
However, many are expecting more rate cut during the FOMC meetings over the next 2 days and may trigger portfolio realignments again following the US 10-year Treasury rate touching a 6-week high recently above the 1.8%. In view of this, we do not foresee market volatility to diminish anytime soon.
Nonetheless, we reckon the local bourse to be relative well supported at current levels with focus again centred on the lower liners.

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Global stock markets closed on higher note last week with S&P 500 Index recorded an all-time high spurred by positive developments on the US - China trade talk progress. On the local front, FBM KLCI managed to find its support at 1,570 level.
Weekly foreign funds continued to be positive, posted net inflow of RM302.4m with year-to-date net outflow of RM8.4bn. Losers of 17 outnumbered 9 gainers in KLCI last week.
Top 3 performers were GENM (+1.31%), DIGI (+1.07%) and IHH (+1.06%) while the 3 losers were RHB (-1.93%), AIRPORT (-1.35%) and PETGAS (-1.08%).

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The recent concluded SCxSC 2019 Fintech conference has reinforced the digital agenda of Malaysia in embracing and facilitating the growth of fintech companies.
Budget 2020 has shown the government foresight in accelerating digitalisation of companies to head towards IR 4.0 as we move up the E&E value chain.
We believe interest in these sectors will continue to perform from the recent incentives announced in the Budget 2020. This will benefit technology related companies such as UWC, Dufu, Mi Technovation and Revenue.

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Blue chips on the local bourse is underperforming to say the least. The FBM KLCI has declined 7.2% year to date dragged down mainly by banking stocks which were drastically sold down by foreign funds.
On the flipside, we are encouraged by the heightened trade velocity of the smaller cap companies during the same period as reflected by the almost 20% gain of the FBM Small Cap index YTD.
Dwelling further into the performance, both the Construction and Technology sectors are the saviours of market participation thus far with both indices saw 32.3% and 28.4% jump so far this year.
We believe liquidity would continue to flow into both sectors as companies within are anticipated to benefit from the recent incentives via Budget 2020. For Tech we favour names like Dufu, Datasonic, Mi Technovation, Greatech and Revenue.

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It’s been almost 2 weeks since the tabling of Budget 2020 and we noticed that construction related contracts has been trickling in which we believe is a good sign.
Thus far contracts mentioned have totalled RM3.3bn for a plethora of smallish construction players namely TRC Synergy (RM99.5m), KKB Engineering (RM61m), Econpile (RM44m), Advancecon (RM50.5m), Vizione (pending RM2bn), Crest Builders (RM155m) and Vertice (RM851m).
Although the impact on the local bourse has been rather muted, we reckon going forward interests on these companies to gather momentum once more projects are announced as the hype on the construction sector is lifted again.

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