By Ranjit Singh
THE market barometer FBM KLCI rose nearly 2% to around 1,588 points this morning as the market digested news of the further loosening of the Movement Control Order (MCO) and the introduction of the RM35 bil Penjana short term package to mitigate the economic impact of the Covid-19 outbreak.
The top gainers included Nestle (M) Bhd, Petronas Dagangan Bhd, Hartalega Holdings Bhd, Top Glove Corp Bhd, Fraser & Neave Holdings Bhd, Supermax Corp Bhd and Hong Leong Financial Group Bhd.
Philip Mutual Bhd’s chief strategist Phua Lee Kerk told FocusM that the upward momentum in the bourse was expected as economies around the world were coming out of their self imposed lockdowns.
“I think the market is taking a cue from the fact that economies around the world were lifting lockdowns. The non-farm payroll figures from the US also indicate that the worst might be over and the effect of the massive stimulus injected to the economy was beginning to bear results,” said Phua.
However, he cautioned that the market may stage a pullback due to profit-taking activities.
“It was only natural for investors to take some money off the table as prices have risen quite substantially and this may result in a pullback in the FBM KLCI,” added Phua.
He also said that the true gauge of the market’s performance would be in September as the second-quarter corporate results come in. Investors would want to assess corporate results at that time and if they are favourable, it may be an impetus for the FBM KLCI to trend higher.
Bloomberg said today that Asian stocks opened mostly higher, extending a global rally after their US peers pushed back into the green for the year as easing lockdowns bolstered economic optimism.
Meanwhile, Rakuten Trade’s vice president Vincent Lau told FocusM that there may be a pullback in the market as prices had risen consistently in the past trading days.
“There may be some profit-taking activities among investors as prices have risen somewhat. This pullback is healthy as it allows the market a breather to settle at higher levels in the future,” said Lau.
UOB KayHian’s head of research Vincent Khoo wrote in a research report today that he expects market consolidation to take place soon. The research firm is overweight on the media and telcos, and tactically the rubber glove and utility sectors while it’s underweight on the aviation, property and selective O&G stocks, as the tough reality of the global and (more so) domestic economic fallout will eventually temper the current momentum trade on economic recovery plays.
Khoo said there were trading opportunities in the auto and property sectors, which were respectively modest and moderate beneficiaries of the government’s new measures/incentives, but this has diminished as the stocks have significantly rebounded ahead of the fiscal stimulus announcement.
UOB KayHian’s top large-cap picks were Astro Holdings Bhd, Genting Malaysia Bhd, Tenaga Nasional Bhd, Top Glove Corporation Bhd and Westports Bhd.
At 12.30 pm today, the FBM KLCI was at 1,579 points, up by 23 points from Friday’s close. – June 9, 2020
