Market Review

Malaysia: The FBM KLCI (-0.4%) recorded its third straight losing streak after key index erased all its intraday gains pressured by selling activities in selected index heavyweights in the second half of the trading session yesterday. The lower liners edged mildly higher, while energy sector (+12.3%) rallied, bucking the negative broader market trend.

Global markets: US stockmarkets succumbed to the eleventh hour selling pressure as the Dow (-0.4%) snapped a seven-day winning streak, dragged down by weakness in technology stocks as China’s smartphone shipment fell 35.0% YoY in July 2020. European stockmarkets trended higher, while Asia stockmarkets closed mostly higher yesterday.

The Day Ahead

With the lack of fresh impetus, we think that the consolidation may continue to be a feature, while the impending batch of corporate earnings may see any gains to be tempered by quick profit taking activities. At the same time, the weakness on Wall Street overnight may permeates to stocks across Bursa Malaysia. Still, we think that rotational play amongst the lower liners will keep trading activities at an elevated level.

Sector focus: We continue to favour the energy sector following the Brent oil prices attempt to break above the US45.00 bbl level. Meanwhile, the pullback in healthcare stocks is deemed to be healthy for investor to digest their recent gains before returning into the scene again in the foreseeable future.

FBMKLCI Technical Outlook

The FBM KLCI has formed a bearish candle after rejecting both the daily EMA9 and EMA20 level after reversing all its intraday gains yesterday. Hence, we expect the consolidation to be in place with 1,590 serving as the immediate resistance, followed by 1,615. On the downside, the immediate support remained pegged at 1,550, followed by 1,530. Indicators are still weak with the MACD continues to tread below the Signal Line, while the RSI remains below 50

Source: Mplus Research - 12 Aug 2020