• The KLCI closed lower last week at 1,799.17, falling by 1.1% versus the prior week on currency contagion, as well as US-China feud.

• The selling pressure on the broader market still clouding foreign and local retail Investors sentiment. Foreign investors were net sellers worth RM663.4m ahead of the long weekend.

• For YTD 2018, local investors continued buying support the market and has reached RM9.4bn. Since May 2018, foreign funds net selling has risen to RM11.9bn.

Outlook still weak

Key highlight for the week is the positive net buy of RM629m by local institutions as opposed to net sell of RM5.8m in week 35. The sell-off in currencies of emerging markets still remained as the largest impact to the stock market. BNM’s decision to maintain its OPR at 3.25% was largely expected. Meanwhile the ringgit was not spared and dipped lower to RM4.14 to the USD. The Malaysian market was also hurt by weakness in telco sector. To-date foreign selling of Malaysian equities is RM9.3bn.

The US markets closed slightly negative after the deadline of public comment on US-China trade feud ends worsen as Trump prepare to carry an additional USD267bn in Chinese goods despite USD200bn threat could materialise very soon.

Week 37 outlook

The performance of the ringgit this week as emerging currencies faced continued selling will likely be the main focus. Several currencies, such as Indonesian rupiah and Indian rupee have hit multiple year lows. The Brazilian real appears to be under renewed pressure this week.

Several Asian stock markets have weakened early this week led by China market. Indeed, Malaysian equities could be affected by negative development in the last couple of days.

Source: BIMB Securities Research - 12 Sept 2018