Market Review

Malaysia: The FBM KLCI (-0.6%) retreated after experiencing a choppy trading session, mainly dragged down by weakness in glove heavyweights yesterday. The lower liner, however, marched higher on the back of rotational play; particularly in pharmaceutical-related stocks, while the broader market ended mostly lower.

Global markets: US stockmarkets extended their gains as the Dow (+0.6%) re claimed the 27,000 psychological level on optimism over the new stimulus measures that outweighed the rising geopolitical tension with China. European stockmarkets retreated, while Asia stockmarkets were mostly downbeat yesterday.

The Day Ahead

With the lack of follow-through buying interest, we see the FBM KLCI remain in consolidation as the recent glove-induced rally might be taking a breather. At the same time, the lofty valuations might cap further gains at this current juncture. Nevertheless, the ample liquidity driven market may continue to provide further trading opportunities as rotational plays dominate the current market scenario.

Sector focus: While demand for pharmaceutical-related stocks are on hot cakes, we expect the rally in technology remain upbeat after the Semiconductor Equipment Manufacturing Industry (SEMI) expects global sales of semiconductor manufacturing equipment to increase by 6.0% YoY to US$63.2bn in 2020. Meanwhile, the construction sector is also seeing the light at the end of the tunnel as mega-infrastructure projects will accelerate over the near future.

FBMKLCI Technical Outlook

The FBM KLCI was largely in the negative zone, but managed to hold above the daily EMA9 level. The uncertainty in recent days suggests that the consolidation may prolong with the resistance remain at 1,615, followed by 1,620. The support is pegged at 1,560, followed by 1,530. Indicators have turned mixed with the MACD Indicator flashing a SELL Signal, but the MACD Line remains above zero, while the RSI remains above 50

Source: Mplus Research - 23 Jul 2020