Market Reports

• Global equity markets are hopeful of trade deal as US President Donald Trump is scheduled to meet China’s Vice Premiere Liu He and both sides are keen to strike a trade deal, never mind a partial deal.
• Today is the D-day Budget 2020 for our local market with high expectations of an expansionary budget to be tabled later today.
• The much-needed catalyst for our equity market is for the pump priming of our economy and this would propel our KLCI to 1,600 level.

• The global volatility storm continues to bombard the financial markets over the immediate term as we do not foresee any solution in sight. It is now all rather tense for US/China, the Middle east and Britain as we all are guided into a realm of uncertainty.
• Judging by the jittery sentiments we reckon it will require a lengthy path to recovery if there is any. For now, volatility will continue to orchestrate the trading pattern as we expect another day of downside bias for the local bourse.
• The FBM KLCI is seen to be rather well supported at the 1,550 level ahead of Budget 2020 amid constant foreign selling. Nonetheless, we would advocate investors to look at construction related counters as the market are generally expecting roll-out of certain mega projects.
• Within the small cap space, we like Vertice, Crest Builders, Vizione, Inta Bina and TRC.

• We believe the local bourse to remain in the doldrums in the absence of any catalysts for the time being. Reflecting investors sentiments now at its lowest ebb, foreign funds continue with their selling as net foreign outflow has now touched RM8.7bn year to date.
• Disappointedly we reckon majority of the foreign fund managers are not expecting much from Budget 2020 hence the persistent selling on domestic equities.
• As a result, the Ringgit is not performing either hovering at almost the MYR4.20/USD1 level displaying underlying weaknesses amid the shift to a low interest rate regime within the region.
• Expect the FBM KLCI to remain stuck in its consolidation phase within the 1,550-1,560 range today.

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• Looks like more pressure on Asian equities today on the back of weaker US economy (no thanks to Trump) and his latest tariff move on European goods.
• With the negative effects now rippling back to the US economy, Trump may have more bullets in coercing the Federal Reserves to cut rates more aggressively.
• Meanwhile, we may have to brace ourselves for more volatility going forward as funds would again be shifting back to Bonds on expectations of more rate cuts. Locally, the FBM KLCI is currently sitting on a 5-year low with support seen at the 1,530 level.

• We expect interest rates to remain in the forefront again as the Reserve Bank of India is widely expected to cut rates amid the dwindling global economic growth.
• Meanwhile, many is also anticipating the Federal Reserves to be more aggressive in reducing the Fed rate with the employment figure looking less sanguine following a series of below par economic data in the US.
• The US 10-year yield is already on a downtrend to 1.53% re-testing the year low of 1.46%. Locally, we expect another dull day for the equity market in the absence of any catalysts with rotational plays on the small/mid cap counters to continue.