rakuten trade market reports : Page 29

It is obvious that our equity market as well as our economy are in dire need of a major booster. With Budget 2020 to be tabled this Friday, we are hoping the government will heed the voice of the nation to pump prime both.
For instant impact, without a doubt tax reduction (both personal and corporate) and the reintroduction of GST albeit at a lower rate would be most welcome by most.
In addition to this, as mentioned our bankers and developers should also do their part in addressing the prevailing oversupply condition within the property scene.
For today, we reckon the FBM KLCI would remain in its consolidation rut with some downside bias and see the 1,550 as the immediate psychological support.

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Major stock markets finished in negative territory last week following the tariff imposed by US on the USD7.5bn EU imports while economic data also showing signs of economic slowdown.
The Dow Jones Industrial Average Index tumbled 343.1 points to 26,573.7. China stock markets were closed since 1 Oct due to National Day Golden Week. In local market, the FBM KLCI lost 1.7% to 1,557.7.
Weekly foreign funds continued to be in negative, posted net outflow of RM769m with year-to-date net outflow of RM8.7bn. Losers of 22 outnumbered 5 gainers in KLCI last week.
Top 3 performers include SIME (+1.78%), GENM (+1.32%) and PETGAS (+0.73%) while the 3 losers were KLK (-7.97%), AMMB (-4.11%) and PBBANK (-3.98%).

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Trump may have shot himself in the foot as the US economic data deteriorated much steeper than anticipated. With almost 60-70% of corporate America earnings are derived overseas one should almost expect results for Wall Street to be adversely impacted amid the prevailing tariff war with China.
In our view, Trump has had singlehandedly created existing global market volatility and we do not reckon he is relenting anytime soon.
Meanwhile, we are also monitoring the ascension of the Thai Baht (YTD +6% vs USD) boosted by the influx of hot foreign funds triggering a mild déjà vu feeling prior to the 1997 Asian Financial crisis.

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A lot has been said by the property related players in cutting the RPGT (Real Property Gains Tax) to improve the ailing property market.
While this is deemed as a beneficial move, this will not improve the participation of first time buyers rather will encourage those with high speculative interests.
To address the prevailing property overhang, it would require both the banks and developers to collaborate. For once, the developers may need to relook at their pricing while the banks should not be too stringent on their scrutiny of applicant especially for first time buyers.

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Global markets are expected to remain volatile with eyes on China’s economic data manufacturing & PMI data to be released later today and US data including ISM manufacturing and employment in the coming days.
On our local front with our Budget 2020 about two weeks away, there will be much speculation on what good news it may bring to corporates, investors and man on the street.
Historically, there has been pre-budget rally for our markets running up to the Budget Day on 11 October 2019 and we remain optimistic it will rally above 1,600 level, hence we recommend investors to accumulate at current level.

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