FMB KLCI - DAILY - 23/4/2019
• The FBM KLCI flatlined after the key-index gave back all of its gains by the end of the session, following weakness in telco heavyweights. In contrast, the lower liners – the FBM Small Cap (+3.1%), the FBM Fledgling (+1.8%) and the FBM Ace (+0.5%) were unaffected and powered higher, while most of the broader market advanced – led by strong gains in the Construction and Energy sectors.
• Market breadth was positive as advancers outrun the decliners on a ratio of 616-to-322 shares. Traded volumes, meanwhile, almost doubled to 4.78 bln shares amid rotational plays in the lower liners.
• Broader market underperformers were Hong Leong Industries (-22.0 sen), Genting Plantations (-16.0 sen), Negeri Sembilan Oil Palms (-14.0 sen), Rapid Synergy (-11.0 sen) and PPB Group (-8.0sen). Telco heavyweights like Axiata (- 16.0 sen) and Digi (-12.0 sen) retreated amid expectations of elevated capex and intense competition in the industry. Other key decliners include Nestle (-60.0 sen), Petronas Dagangan (-50.0 sen) and Kuala Lumpur Kepong (-12.0 sen).
• Amongst the blue-chip outperformers were Malaysia Airports (+34.0 sen), Sime Darby (+12.0 sen), CIMB (+10.0 sen), Hartalega (+9.0 sen) and Maybank (+6.0 sen). Cocoa bean processor Guan Chong Bhd gained 38.0 sen on the back of strong growth prospects in 2019, alongside Tasek (+66.0 sen), DWL Resources (+37.0 sen), Lafarge Malaysia (+31.0 sen) and Ekovest (+30.0 sen).
• Key regional indices closed mixed amid the lack of fresh trading catalysts. The Nikkei eked-out gains after a volatile session, buoyed by real estate-related counters. In contrast, the Shanghai Composite (-1.7%) declined with all of its sub-sectors in the red, with the exception of the energy sector. The Hang Seng Index remained closed, while ASEAN equities closed mixed.
• U.S. benchmark indices finished mostly higher, ahead of the earnings reports from several high profile companies and jump in energy prices on expectations that the U.S. will end its sanctions exemptions for major oil importers. The Nasdaq (+0.2%) and the S&P500 (+0.1%) inched higher to previous highs, although the Dow weakened, dragged down by aeronautics and defense company Boeing.
• European markets, meanwhile, remained closed for extended Easter holidays.
THE DAY AHEAD
• The key index’s inability to hold on to its intraday gains is disappointing as it continues to show that the market undertone is frail and the buying support is still too weak to ensure a sustained upside. This also leaves the near term outlook looking indifferent again and we think that the mixed-to-lower market trend is likely to persist over the near term.
• Over the near term, market players are awaiting for potentially new leads from the Prime Minister’s upcoming China trip to bolster the market’s outlook. In the interim, however, it appears that much stronger catalyst are required to provide the push for the FBM KLCI to not only head higher, but to also sustain an upside streak.
• Therefore, we still see the 1,630 level serving as the immediate resistance, followed by the 1,640 level. On the other hand, the supports remain at the 1,620 level and the recent low of 1,609 respectively.
• After a strong push on construction stocks yesterday, we see profit taking activities setting as traders lock-in their gains. The denial of Ekovest and IW City on their participation in the Bandar Malaysia project will also prompt the profit taking activities.
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.
Please refer to https://mplusonline.blog/m-power-focus/ for more information.