Market Reports

• The Construction sector did not disappoint since our recommendation in February. The FBM Construction Index gained almost 26% since then and we expect there to be more upside despite the cautious stance from some of our peers.
• Nonetheless, the index remains 25% below its peak prior to GE14. Our positive stance on the sector stems on the fact that the sector thrives on positive news flow and believe there to be more in the pipeline.
• We remain buyers on Gamuda, IJM, Econpile and laggards like TRC, Gabungan AQRS, Vizione, George Kent and Crest Builder could potentially offer substantial upside.

• We expect buying interests on equities to prevail in view of yesterday’s record close on Wall Street coupled with the decline in the US 10-year yield to a 2 year low at 1.95%.
• Consensus remain adamant that the Feds will cut rates in due course and expect the 10-year treasury rate to continue hovering at below the 2.0% level.
• Meanwhile, we expect the MYR to strengthen vis-à-vis the USD and may hit our 2019 target of RM4.10 rather soon.

• Our Malaysian equity markets have seen some green shoots as KLCI has been steadily recovering to close at 1,691.00 and is likely to cross 1,700 points as we have seen five straight days of net foreign fund inflow amounting to RM468.8m into our markets recently.
• We believe Maybank, which has been the laggard in the KLCI resurgence, should play catch up amongst the rise among the KLCI linked stocks. Currently trading at RM8.98 per share, Maybank is offering an attractive dividend yield of 6.35%.

• Just as we though the trade was between the US and China is off the boil, in come another kick in the mouth as the US are now targeting the EU (European Union) with additional tariffs.
• Though the amount may not be huge of US$4bn nonetheless, such move may create a certain degree of volatility to the financial markets. Domestically, sentiments are improving with more foreign fund inflows amounting RM114.4m yesterday.
• Recall, that we mentioned of net foreign inflows by the 3Q this year and hope that this will be sustainable.

Regional markets were all in positive territory with US markets hitting record high on the back of the trade war truce between US and China during the recent concluded G20. The DJI continued its positive close rising 0.64% or 169.21 points to 26,717.43.

The FBM KLCI continued its bullish run rising 7.01 points for the week to 1,683.62. Foreign funds flow were net positive for the week with RM308.79m inflow. Performance amongst the FBMKLCI components saw gainer 16 gainers to 12 losers.

Top 3 performers include PChem (+3.68), RHB (+3.58%) and Axiata (+3.00%) while the 3 losers were Maxis (-2.96%), PMetal (-0.90%) and HLFG (-0.64%).