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Market Pulse
Daily updates brought to you by Malacca Securities. 

FMB KLCI - DAILY - 19/10/2018



Downside Pressure Rises Again
• The FBM KLCI (-0.2%) retreated in tandem with the negative performance across its regional peers on concerns over rising U.S. interest rates. The lower liners also closed mostly lower as the FBM Small Cap and FBM Fledgling shed 0.2% and 0.04% respectively, while broader market closed mixed.

• Market breadth turned negative as decliners overpowered advancers on a ratio of 472-to-338 stocks, while 371 stocks closed unchanged. Traded volumes fell 1.2% to 2.00 bln shares as investors were quick to lock-in their recent gains.

• Sime Darby Plantation (-10.0 sen) was the biggest decliner on the FBM KLCI, followed by Hong Leong Financial Group (-8.0 sen), IHH (-8.0 sen), MISC (-6.0 sen) and TM (-6.0 sen). Among the biggest decliners on the broader were Fraser & Neave (-74.0 sen), KESM Industries (-64.0 sen), Ajinomoto (-30.0 sen), Paragon Globe (-15.5 sen) and Pintaras Jaya (-13.0 sen). 

• Consumer products giants like Dutch Lady (+60.0 sen), Heineken (+44.0 sen), and Carlsberg (+24.0 sen) topped the broader market advancers list, while Taske Corporation and MPI rose 24.0 sen and 14.0 sen respectively. Key winners on the local bourse were Nestle (+10.0 sen), Press Metal (+9.0 sen), Hong Leong Bank (+4.0 sen), Public Bank (+4.0 sen) and KLCC (+3.0 sen).

• Asia benchmark indices edged lower yesterday as the Nikkei fell 0.8% after exports data in September 2018 unexpectedly fell 1.2% Y.o.Y – the first decline in 22 months. The Hang Seng Index slipped 0.2% after erasing all its intraday gains, while the Shanghai Composite sank 2.9% after the Chinese Yuan depreciated to its lowest level in two years against the Greenback. ASEAN stockmarkets, meanwhile, were painted in red yesterday.

• U.S. stockmarkets took a beating overnight as the Dow sank 1.3%, dragged down by lingering concerns over the U.S.-China trade war’s impact on economic growth, the Italian debt crisis and rising interest rates. On the broader market, the S&P 500 declined 1.4% to close below the 2,800 psychological level, while the Nasdaq tumbled 2.1%.
 
• Earlier, major European indices – the FTSE (-0.4%), CAC (-0.6%) and DAX (-1.1%) extended their losses after erasing all their intraday gains. Market sentiment was dampened further by European leaders’ frustration at the Brussels summit after Britain failed to offer any new proposals over the Brexit deal.

THE DAY AHEAD

• There will be no let-up in the market’s downside pressure as sentiments are remaining frail amid the combination of toppish market conditions and trade issues that is dampening global market conditions as well. Consequently, we expect the frail market conditions to lead Malaysian stocks to end the week on another downbeat note.  

• Although we think Malaysia stocks could end the week lower, we still think the downsides could be mild as we expect institutional players to provide support. At the same time, the selling pressure has also weakened, particularly from foreign funds that provide some reprieve for the index-linked stocks. Hence, we see the FBM KLCI finding support at the 1,740 level for now. Meanwhile, the near term resistance remains at 1,750. 
• The lower liners and broader market shares are also likely to drift lower amid profit taking activities ahead of the weekend.


 

The Market Pulse is a proprietary report courtesy of Malacca Securities Sdn Bhd (a participating organisation of Bursa Malaysia Securities Berhad) and has been abbreviated by Focus Malaysia. The report is for information purposes only and is not a recommendation to buy or sell any securities or financial instruments.

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