rakuten trade market reports : Page 32

Major stock markets mostly posted weekly gain last week following the fresh stimulus from European Central Bank imposing quantitative easing to boost eurozone economy. Brent crude oil price also saw a surge to a high of US$72 after the attack on Saudi Arabia oil site.
In local market, the FBM KLCI gained 0.34% to 1,601.25. Weekly foreign funds turned positive to RM192.1m of net inflow. Performance amongst the FBMKLCI components saw 14 gainers to 12 losers.
Top 3 performers include PCHEM (+5.86%), PETDAG (+4.95%) and AXIATA (+3.89%) while the 3 losers were IHH (-1.91%), TENAGA (-1.57%) and DIALOG (-0.85%).

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Things may have turned positively amid easing of stance from the US and the QE by the European Central Bank. Nonetheless, until the situation becomes more concrete, we remain cautious on the financial markets as the US are masters of flip-flopping.
Currently, we are witnessing a flight into equities as investors are continuing to ease their holdings in bonds. With the western world now clamouring for lower interest rates, foreign funds are also finding their way into Asia as depicted by the stronger Asian currencies.
Locally, the MYR have strengthened to the 4.16 level from 4.22 against the USD earlier this month.

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It is going to be an interesting few weeks as both the US and China are showing signs of relenting from their tariff war. Meanwhile President Trump urged the Federal Reserves to further lower the rates to near zero which many may view as a boost to the equity market.
Locally we may see buying on the local bourse to continue from yesterday’s uptrend as foreign funds seems to have made a U-turn on Malaysian equities. We maintain on cautious mode and anticipate the FBM KLCI to see some resistance at the 1,610 level.

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The US 10-year Treasury yield rebounded to a high of 1.73% having touched a low of 1.45% only a week ago. Such volatility on the yields has been rarely seen suggesting more market volatility ahead within the financial markets.
Meanwhile, we are indeed dismayed with the breakdown of the potential merger between Telenor and Axiata as this will put additional pressure on the local markets which is in dire need of some solid catalysts.
As a result, foreign investors have been shunning the local bourse despite trading at reasonable valuations currently. Year to date, net foreign outflow remains persistent totalling RM7.4bn thus far.

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Bank of China has again cut the reserve requirement ratio for banks potentially releasing around 900bn yuan or US$125bn into the financial system to stem the expected economic slowdown in the country amid the ongoing trade spat with the US.
This is by far the most aggressive stance made by the Chinese authority which should have positive impact cascading down to other countries within the region.
Meanwhile, we reckon the domestic market to be sideways in the absence of any catalysts with the 1,600 seen as the immediate psychological support level.

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