Market Pulse
Daily updates brought to you by Malacca Securities. 

FMB KLCI - DAILY - 20/6/2019

Toppish Again
• Tracking the upbeat performance in the regional stockmarkets, the FBM KLCI (+0.8%) also posted gains as investors continue to monitor the U.S.-China trade relationship. All the lower liners rallied except the FBM Ace (-0.7%), while eleven-of-twelve sub-sectors closed positively on Wednesday.

• Market breadth also recovered as advancers overturned the decliners on a ratio of 474-to-330 stocks, while traded volumes rose 19.3% to 2.42 bln shares, lifted by the prevailing positive sentiments.

• Blue-chip stocks like Malaysia Airports (+58.0 sen), Tenaga Nasional (+28.0 sen), Sime Darby Plantation (+18.0 sen), IOI Corporation (+14.0 sen) and Maxis (+14.0 sen) rallied on Wednesday, together with Heineken Malaysia (+26.0 sen), Atlan (+22.0 sen), BAT (+20.0 sen), Allianz (+16.0 sen) and MB World Group (+13.0 sen).

• On the losers end, Bintulu Port (-23.0 sen), Southern Acids (-16.0 sen), Manulife (-13.0 sen) and Vitrox (-12.0 sen) retreated. Lafarge Malaysia (-11.0 sen) also declined after major cement players in Malaysia agreed not to increase cement prices. Key-index decliners, meanwhile, were banking heavyweights like Hong Leong Bank (-30.0 sen) and RHB Bank (-9.0 sen), alongside MISC (-5.0 sen), Hap Seng Consolidated (-3.0 sen) and Sime Darby (-1.0 sen).

• Asian equities rallied on Wednesday on expectations of potential rate cuts by key global central banks and a temporary ceasefire between Washington and Beijing ahead of the G20 summit next week. The Nikkei (+1.7%) hovers near its six-week high, boosted by Nomura after the investment firm announced its shares buyback plan. The Hang Seng index and the Shanghai Composite also added 2.6% and 1.0% respectively, while most ASEAN stockmarkets advanced.

• Notable U.S. bourses logged gains after the U.S. Federal Reserve left interest rates at it is, albeit adopting a more accommodative stance – opening the way for potential interest rate easing this year. Subsequently, the Dow (+0.2%), the S&P 500 (+0.3%) and the Nasdaq (+0.4%) rallied, mostly supported by extended buying-support in tech stocks, in-tandem with renewed risk appetite.

• Meanwhile, key benchmark European stockmarkets finished mostly lower as investors lock-in gains ahead of the FOMC’s decision on interest rates. The FTSE fell 0.5% amid the prevailing geopolitical uncertainties, while the DAX pulled back slightly. The CAC, however, outperformed its peers and closed with a 0.2% gain.


• After making decent headway over the past two sessions, the key index is again in the toppish zone which could limit further gains over the near term, in our view. Already its technical indicators have moved back into the overbought zone and this could see increased profit taking activities. There are resistances at the 1,670 and 1,680 levels, while the supports are located at the 1,654 and 1,650 levels respectively.

• While there has been renewed optimism in the trade dispute between the U.S. and China, coupled with the easing geopolitical concerns, the global economy, and that of the Malaysian economy, are still in a state of flux as the slower growth is still unfolding that could lead to slower corporate earnings growth in its wake. Therefore, we think that the cautious market undertone still prevails and could still dampen the longer term market outlook. 

• Although the lower liners and broader market shares made headway yesterday, the near term outlook is still largely indifferent with the lack of catalysts. Consequently, we think that further near term upsides could be tempered by bouts of selling activities as retail players would be quick to lock-in their profits. 


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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