• The KLCI made some grounds as it closed the week at 1,819.66, rising by 11.07 points versus the previous week.

• Investors turned cautious amidst the deadline (Sept 5) on Trump’s higher tariff on Chinese import. Foreign investors turned net sellers over the Merdeka-shortened week.

• Local retail was net buyers worth RM21.1m.

• For YTD 2018, local investors continued support for the market with a share worth RM8.7bn. Post GE, foreign funds net sellers has risen to RM11.3bn.

Local Institutions firmly support the local bourse

Key highlight for the week is the positive net buy of RM21.1m by local retail as opposed to net sell of RM23.8m in week 34. The 2Q earnings season helped carry the positive sentiment from previous week, but failed to attract foreign buying interest as the net selling resumed due to concerns on US-China trade issues and a weaker ringgit. To-date foreign selling of Malaysian equities is RM8.7bn.

Meanwhile, the US markets closed at a new high during the week, lifted by positive momentum as the NAFTA agreement between the US administration and Mexico buoyed sentiment.

Week 36 outlook

Key domestic event for week 36 are BNM’s MPC meeting to be held on 5 September. We foresee the OPR will be at 3.25%, remaining unchanged for this year. Earnings announcement for 2Q18 period concluded on 30 August, and we do not expect this to have a significant impact on the market as most results were in in-line with expectations.

The performance of the ringgit this week as emerging currencies, i.e. Indonesia, Turkey and Argentina faced renewed selling will be the main focus, in our view.

Source: BIMB Securities Research - 3 Sept 2018