rakuten trade market reports : Page 27

With Budget 2020 done and dusted, we would expect the construction sector to see more activities moving forward. Already we saw Advancecon, Crest Builder, Econpile and Pintaras have had added new contracts into their orderbook of late.
Activities are also anticipated to heighten in Sabah and Sarawak along the Pan Borneo Expressway after a relatively subdued performance since its inception in 2017.
Most importantly, Consortium Zenith had also inked the RM6.3bn infrastructure project in Penang which is anticipated to commence on 31st October and we foresee companies namely Vertice and Vizione to play a large part in it.
For this, we reckon it is time to re-look at the smallish construction players to ride on another construction play soon.

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Investing climate remains jittery as sentiments are now dictated by expectations of the US/China trade discussion outcome. With the situation still fluid, we believe regional markets to remain stuck in a realm of extreme volatility.
Meanwhile amid the geopolitical tension, tanker rates have had surged to a multi-year high with demand vastly outstrip supply for very large tankers.
Whether such a scenario would persist remains to be seen but we reckon MISC should be entering a boom year. As for the FBM KLCI, we anticipate some selling to emerge today with the 1,560 as the psychological support level.

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Budget 2020 was a non-event focusing predominantly on the welfare of the B40 category. Whilst the middle class has been largely ignored, indirect benefits would come from the reduction of toll rates.
It is apparent that the Construction and Tech sectors would be the main beneficiaries with the roll-out of mega infra related projects coupled with a plethora of incentives for start-ups.
The Property sector should also benefit from the reduction of the price threshold for foreign buyers however we are dismay that the developers and bankers are not doing their part in addressing the oversupply.
We are Neutral on the Budget as the impact of the local bourse is expected to be rather muted. Though we may see some buying returning to the local bourse, any upside should be capped as sentiments are seen to remain status quo. Immediate resistance is seen at the 1,560 level.

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Major stock markets ended higher last week on the positive development of US-China trade deal. Dow Jones Industrial Average Index rose 338.6 points to 26,816.6 last week as market sentiment was boosted by the announcement of partial trade deal with China.
Conversely, the FBM KLCI was 0.14% lower for the week. Weekly foreign funds were negative, posted net outflow of RM276.6m with year-to-date net outflow of RM8.9bn.
Gainers outnumbered losers by 16 to 9 within the KLCI last week. Top 3 performers include MISC (+6.43%), TENAGA (+1.76%) and HLB (+1.12%) while the 3 losers were TOP GLOVE (-4.45%), PETDAG (-2.70%) and AMMB (-2.53%).

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There seems to be a temporary reprieve of sorts for the equity markets ahead of the US/China trade talk. Though such headline news seems positive, we have been through this path numerous times and would not bet that there to be any agreement in sight between the two superpowers.
As such, we continue to remain cautious and eagerly wait for the tabling of Budget 2020 tomorrow. Therefore, we reckon the broader market to remain nonchalant with buying interests zeroing on construction related companies.
We expect the FBM KLCI to test the 1,550 level and may even break this psychological level today.

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