FMB KLCI - DAILY - 24/5/2019
Weak Sentiments To Dominate
• The FBM KLCI posted back-to-back losses on the back of a weaker Ringgit and energy prices amid concerns of burgeoning stockpiles. The lower liners - the FBM Fledgling (-1.6%), the FBM Small Cap (-2.3%) and the FBM Ace (- 2.4%) were badly beaten down alongside the entire broader market, as the Technology and Energy sectors took the worst beating.
• Market breadth was bearish as losers more than tripled the winners, although traded volumes surged 32.1% to 2.38 bln shares amid the sharp selldown in Malaysian equities.
• Petronas-linked counters like Petronas Gas (-22.0 sen) and Petronas Chemicals (-19.0 sen) led the downfall on the Main Board, alongside RHB Bank (-18.0 sen), Ambank (-9.0 sen) and Genting (-5.0 sen). Other losing stocks, meanwhile, include Malaysian Pacific Industries (-37.0 sen), Allianz (-24.0 sen), Carlsberg (-24.0 sen), Dayang (-24.0 sen) and Pos Malaysia (-22.0 sen) after the postal services provider announced its biggest ever full-year net loss in FY19.
• Notable broader market advancers, on the other hand, consists of Fraser & Neave (+48.0 sen), United Plantations (+18.0 sen), Westports (+17.0 sen), Cahya Mata Sarawak (+13.0 sen) and Ajinomoto (+12.0 sen). Selected heavyweights like Nestle (+60.0 sen), Petronas Dagangan (+12.0 sen), Press Metal (+7.0 sen), Genting Malaysia (+6.0 sen) and Hong Leong Bank (+6.0 sen) also bucked the general downtrend, mostly due to buying-support in the eleventh hour.
• Asian shares were sent careening following amid lingering concerns of the ongoing tit-for-tat trade war between Washington and Beijing. The Nikkei fell 0.6%, weighed down by the appreciation in Yen, while the Hang Seng Index and the Shanghai Composite erased 1.6% and 1.4% respectively. Similarly, most ASEAN stockmarkets also retreated.
• Wall Street took some heavy losses as unabated trade war tensions rippled across risky assets, further exacerbated by weaker crude oil prices. The Dow was 1.1% lower at 25,490.5 points despite recovering in the final hour, together with the S&P500 (-1.2%) and Nasdaq (-1.6%).
• Key European indices recorded steep losses amid the prevailing negative sentiment in global stockmarkets. The FTSE (-1.4%) closed in the red, while both the DAX and the CAC fell 1.8% each.
THE DAY AHEAD
• As it is, there continues to be support on index linked stocks amid a still largely weak market environment that is rocked by the escalating trade dispute between the world’s two largest economies. The support has helped to sustain the key index above the 1,600 support, but with sentiments turning increasingly frail, we think that the level may not hold for long.
• There remain substantive uncertainties over the global economic outlook as a resolve to the trade dispute is unlikely to be reached anytime soon. This will still weigh on sentiments on Malaysian stocks and will continue to suppress prices for longer, in our view. Meanwhile, the weakening oil prices could also leave oil and gas stocks on the tenterhooks again.
• In all, we continue to see the key index heading lower amid the continuing weak market sentiments and if the 1,600 support gives way, the FBM KLCI could head towards the 1,595 and 1,590 levels. On the other hand, the resistances remain at 1,610 and 1,620 respectively.
• Although there were bouts of support on the index linked stocks, the lower liners and broader market shares were left to drift as most market players closing out their positions. We see the selling activities continuing over the near term as sentiments are still largely guarded.
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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