Market Reports

• President Trump remains the biggest culprit for the global financial markets with his rhetoric on China and the Federal Reserves. His meddling has had triggered the jittery button of most investors as volatility continue to reign.
• Locally we believe the investment climate is excellent for foreign funds to return but may be hampered by Trump’s fear mongering tactics.
• The FBM KLCI is currently trading at really reasonable PER of 15.3x based on 2019 estimates and at an even more attractive 14.5x premised on 2020 forecasts against its multi-year average of around 16.5x.
• Meanwhile, steps taken by Germany to spur ECB’s growth may provide some relief to the financial markets thus we may see some buying activities today with the immediate resistance at 1,620.

• Regional markets were generally positive while Dow Jones has registered a small loss - 0.08% to 25,886.01 points with no major negative news from the ongoing trade concern between US and China and the recovery of US bond yield hitting all time low.
• The FBM KLCI managed to recoup some losses from sell down, inching up 6.3 points or 0.40% for the week to 1,599.22 still below the all-important 1,600 level.
• Foreign funds continued its cautious stance on emerging markets with our markets seeing RM598m net outflow compared a more severe of over RM1bn outflow last week. Performance amongst the FBMKLCI components saw 19 gainers to 11 losers.
• Top 3 performers include DIALOG (+4.13%), SIMEPLT (+2.17%) and KLK (+1.95%) while the 3 losers were HLFG (-2.20%), AMMB (-1.76%) and PETDAG (-1.72%).

• We reckon the financial markets will continue to remain volatile over the next few weeks. Meanwhile we reiterate that a recession is not going to happen anytime soon, but we may see a slowdown.
• As Wall Street is still trending at a premium, it is not surprising that funds are liquidating their holdings in view of a potential slowdown. The Dow Jones Industrial Average PER now hovering at 16.7x (FY19), above its 10-year average of 15.7x plus a potential downgrade on FY20 earnings.
• Therefore, we may see a continued flight to safety out of equities to other asset class like bonds and gold. Yesterday gold price hit a 6-year high at US$1,530.
• We just need to ride out the prevailing uncertainty and continue to advocate Buy on Weakness.

• We are bracing ourselves for another possible regional sell-off following the steep decline over on Wall Street yesterday. Although it is still early days yet in determining recession, investors sentiments of late had been jittery and it does not take much to instigate a selling-down.
• As such we reckon, the selling may have been overdone yesterday. Nonetheless, with investors now becoming more risk averse, any rebound would be met by “profit taking” activities hence we believe the equity markets will remain volatile over the short term. On the domestic front, the FBM KLCI is seen to be supported at the 1,575 level.

.

• Regional financial markets are anticipated to remain volatile over the short term. Following yesterday’s bloodbath, we reckon the equity markets may see some recovery today buoyed by the improved performance on Wall Street.
• With the DJI Average trending above the 26,000 again (+370 points) we could see some bargain hunting on the local bourse. In addition, the US 10-year yield is now at a 3-year low hovering at 1.69% indicating a strong possibility for a rate cut again by the FEDs soon.
• We expect the FBM KLCI to breach the psychological 1,600 level with the immediate resistance at 1,620.