FMB KLCI - DAILY - 19/6/2019
Renewed Optimism On Easing Trade
• The Main Board snapped six consecutive sessions' of losses, driven by bargain-hunting activities in selected telco stocks. The lower liners eked-out gains, although the FBM Small Cap (-0.1%) remained in the red, while the broader market mostly rebounded – led by the Telecommunications and Media (+2.1%) sector.
• Market breadth was negative as losers beat the winners on a ratio of 428-to-357 stocks. Traded volumes, meanwhile, jumped 25.3% to 2.03 bln shares amid the bouts of renewed buying interest.
• Outperforming heavyweights like Hong Leong Bank (+56.0 sen), Tenaga Nasional (+26.0 sen), Axiata (+24.0 sen), MISC (+23.0 sen) and Petronas Dagangan (+18.0 sen) dominated the key-index gainers. Other broader market winners were Fraser & Neave (+38.0 sen), Shangri-La Hotels (+31.0 sen), Bintulu Port (+23.0 sen), Sime Darby Plantation (+18.0 sen) and Telekom Malaysia (+18.0 sen).
• On the flipside, BAT (-76.0 sen), Can-One (-12.0 sen), Hume Industries (-11.0 sen), Eng Kah (-10.0 sen) and UPA Corporation (-9.0 sen) were the main losers in the broader market. The top five significant decliners include glove makers like Top Glove (-13.0 sen) and Hartalega (-5.0 sen) after the former reported weaker-than-expected quarterly results, followed by Nestle (-30.0 sen) Malaysia Airports (-5.0 sen), and Maybank (-3.0 sen).
• Key benchmark regional indices closed mostly higher, with the exception of the Nikkei (-0.7%), weighed down by the weakness in utilities and communication services sectors. the Hang Seng index rose 1.0% - led by strong gains in Tencent, while the Shanghai Composite gained 0.1% after a volatile session. The majority of the ASEAN equities, meanwhile, posted decent gains.
• Wall Street – The Dow (+1.4%), the S&P500 (+1.0%) and the Nasdaq (+1.4%) rallied on easing fears of an all-out U.S.-China trade war after President Donald Trump indicated his willingness to restart trade negotiations with China at the G20 summit next week. Trade-sensitive stocks like chipmakers advanced, while defensive stocks took the backseat.
• Earlier, major European indices rallied on expectations of additional stimulus and potential rate cuts, following a dovish stance from the ECB on Tuesday. The FTSE posted a 1.2% gain, lifted by exporters after the Pound hit a new low. Similarly, the DAX (+2.0%) and the CAC (+2.3%) also closed in the green at the end of the session.
THE DAY AHEAD
• Key index stocks continue to find institutional support yesterday that looks to persist over the near term as the market outlook brightens with the renewed optimism over the resumption of the U.S.-China trade negotiations.
• We see Wall Street’s overnight positivity over the above development to also buoy the local market further and to sustain the near term upsides, albeit the broad based buying interest is still lacking and the technical indicators are veering back into the overbought zones. Despite that, we think that the selective buying to help shore up the key index for longer which may lead it to the 1,655-1,657 levels, before retesting the 1,663 level. The supports, meanwhile, are at 1,650 and 1,644 respectively.
• After the recent pause, we think that the lower liners could make some headway as the more positive market undertone could provide some near term trading impetus. As it is, retail participants have been waiting for fresh leads and the latest trade development could provide the near term catalyst for the retail players to return to equities.
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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