Market Pulse
Daily updates brought to you by Malacca Securities. 

FMB KLCI - DAILY - 18/10/2018

Tight Range Trading
• Tracking the sharp recovery on Wall Street overnight, the FBM KLCI (+0.2%) extended its gains after the key index gapped-up and hovered in the positive territory for the entire trading session yesterday. Likewise, the lower liners – the FBM Small Cap (+1.8%), FBM Fledgling (+0.2%) and FBM ACE (+1.3%), all advanced, while the Financial Services (-0.1%) and Transportation & logistics (-0.2%) sectors underperformed the positive broader market.

• Market breadth turned positive as advancers outstripped decliners on a ratio of 2-to-1 stocks, while 366 stocks closed unchanged. Traded volumes added 32.7% to 2.03 bln shares, lifted by bargain hunting activities in recently beaten down stocks.

• Half of the key index constituents advanced, led by Genting Malaysia (+13.0 sen), followed by Nestle (+10.0 sen), Petronas Gas (+8.0 sen), Digi (+6.0 sen) and IOI Corporation (+5.0 sen). Meanwhile, Carlsberg (+50.0 sen), BAT (+36.0 sen), MPI (+30.0 sen), Aeon Credit (+20.0 sen) and KESM Industries (+20.0 sen) topped the broader market winners list. 

• Meanwhile, notable decliners on the broader include Westports (-11.0 sen), IJM Plantations (-10.0 sen), Top Glove (-10.0 sen), UEM Edgenta (-9.0 sen) and UOA Development (-9.0 sen). On the local bourse, banking giants like Hong Leong Bank (-26.0 sen), Hong Leong Financial Group (-22.0 sen) and RHB Bank (-4.0 sen) fell, while MISC and PPB Group shed 3.0 sen and 2.0 sen respectively.

• Asia benchmark indices extended their gains as the Nikkei jumped 1.3%, buoyed by the recovery on Wall Street. The Hang Seng Index rose 0.1% after recovering all its intraday losses, while the Shanghai Composite added 0.6%. ASEAN stockmarkets, meanwhile, closed mostly positive yesterday.

• U.S. stockmarkets retreated overnight as the Dow fell 0.4% after the mixed bag of corporate earnings could not offset the lingering concerns over rising interest rates. On the broader market, the S&P 500 slipped 0.03%, dragged down by the basic materials sector (-0.8%), while the Nasdaq finished 0.04% lower.
• Despite opening higher, major European indices – the FTSE (-0.1%), CAC (-0.5%) and DAX (-0.5%) all erased their intraday gains to close in the negative territory. The weakness stemmed from the poor Eurozone’s vehicle sales data that fell 23.4% Y.o.Y in September 2018, leading to a selloff in automotive stocks like Peugeot SA (-4.1%), Renault SA (-2.8%) and Volkswagen AG (-0.8%).


• Although the key index managed to recover yesterday as anticipated, the upsides were milder-than-expected as the buying interest remained largely insipid, while the market interest was also selective. 

• With the buying interest remaining largely indifferent, we also think stocks of Bursa Malaysia will make little headway over the near term. The pullback in U.S. stocks overnight will also add a layer of uncertainty to Malaysian stocks. Therefore, we see the market staying rangebound and trend within a narrow range near the 1,740 level for now.  The other near term support and resistance points is at 1,730 and 1,750 respectively. 

• After making decent headway yesterday, we think the lower liners will remain on an upward trajectory as they continue to adjust from oversold. However, their upsides could be tempered by bouts of profit taking activities that will cap the upsides, in our view.


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  for more information.