rakuten trade market reports : Page 42

Expectations for a Feds rate cut has yo-yo of late. This has been amplified by the volatile US 10-year Treasury yield which had dipped to a low of 1.94% only last week before climbing to around the 2.05% yesterday.
Nonetheless amid the prevailing global economic slowdown we believe the Feds may revise rates possibly sometime later this year when data are less than optimistic.
We continue to advocate investors to accumulate on shares now to pre-empt the eventual uptrend when foreign funds inflow picks up momentum.

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As advocated by us previously, foreign funds are certainly making a comeback to the local bourse. For June there was a net foreign inflow of RM140.2m and so far July’s net foreign inflow was more encouraging at RM350.7m.
Though YTD still shows a net foreign outflow of RM4.3bn, we remain confident that foreign funds will seek Malaysia as their preferred destination as the FBM KLCI is currently the worst performer amongst its ASEAN compatriots and is playing catch up.
We maintain our 2019 target at 1,730 for the FBM KLCI for now.

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The Government has heeded our call and announced the resumption of 2 mega infra related projects yesterday. First and foremost, the RM44bn East Coast Rail Link (ECRL) will commence later this month while the double tracking around Klang Valley worth RM3bn will be rehabilitated soon.
Slowly but surely, we expect more infra related projects to be revived soon with Penang being the hub and of course the High Speed Rail (HSR) estimated at RM75bn is another catalyst to boost the domestic economy.
Expect interests on construction companies to return with focus on Gamuda, IJM, Econpile, HSS and Gadang.

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Talks of another rate cut by Bank Negara resurfaced again but does it really do the business? We doubt a rate cut would be effective in resuscitating the ailing domestic economy amid a dearth of economic activities.
What we need now is a swift kickstart of mega infra projects plus a flow of foreign funds into the economy to reignite the confidence of investors. Of late, our status as an investment haven has been battered as our investment ranking within the Southeast Asia region has slipped down to lower ranks.

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Regional markets were mostly in negative territory except for the Philippines stock market last week. The Dow Jones Industrial Average continued its positive trend rising 0.77% or 204.7 points to 26,922.1 for the week.
Meanwhile, the FBM KLCI retraced 0.06% to close the week at 1,682.53. Foreign funds flow continued to be net positive for the week with RM230.2m inflow.
Performance amongst the FBMKLCI components saw gainer 16 gainers to 11 losers. Top 3 performers include DIALOG (+2.45), SIME (+2.19%) and MAXIS (+2.15%) while the 3 losers were TOP GLOVE (-2.62%), TNB (-2.58%) and PMETAL -2.04%).

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