Market Review

Malaysia: The FBM KLCI (+1.2%) resumed trading in a buoyant manner as investors digested a slew of measures under the Short-Term Economic Recovery Plan while the country is now in the recovery phase of the Movement Control Order (MCO). The lower liners also advanced, while all 13 sectors on the broader market finished higher led by the consumer products and services sector (+2.5%) as retail activities recovers on the gradual re-opening of economic activities.

Global markets: Wall Street retreated overnight as the Dow (-1.1%) snapped a six day winning streak as the overbought condition overshot the economic recovery prospects. European equities took cue from the weakness on Wall Street but Asia equities were mostly higher on the re-opening of economic activities.

The Day Ahead

We see the gradual re-opening of economic activities may spur further trading interest of which Sarawak has already committed to roll out the infrastructure projects, namely the Pan Borneo Highway and other infrastructure projects in efforts with Sarawak’s long term policy to be a developed state by 2030 through better connectivity. We believe stocks that have a strong local presence in East Malaysia to be clear winners owing to their historical track record, coupled with the established relationship over the years.

Sector focus: Construction stocks that have established historical track record in both Peninsular and East Malaysia undertaking previous contracts in similar scale.

Despite marching higher yesterday, the key index’s gains were trimmed to form a shooting star candle owing to quick profit taking activities as investors were quick to lock in gains following recent strong recovery. Although upsides are still on the table, we reckon that strong gains are now becoming increasingly difficult to come by and a consolidation is imminent. For now, we see the 1,600 psychological level remain as the key resistance, while the support is located around the 1,530 level.

Source: Mplus Research - 10 Jun 2020