• Malaysian stocks performance was relatively stable last week, with the KLCI at 1,732.14 up by 0.1% versus the previous week. Providing support was local institutions’ net buy worth RM119.9m and subdued foreign selling.

• Investors remained cautious as the 11th Malaysian Plan mid-term review was unveiled. Foreign outflow were lesser, registering –RM128.7m during the week.

• The market is expected to turn its focus on corporate earnings season, which unofficially kicked-off with Digi and Maxis last week.

Market remained subdued

The market was relatively stable although subdued, as it had the first glimpse of the new government’s policies as the mid-term review of 11th MP was unveiled. The development expenditure ceiling will be cut by RM40bn or 15% to RM220bn from the original allocation of RM260bn under the 11th Malaysia Plan (2016-2020), as part of plans to consolidate the country's fiscal position. In addition, MyEG and Datasonic fell sharply by 24.7% and 30.2% amidst corruption charges against the former DPM.

Meanwhile, the US stock market remained volatile last week with investors continued to watch for pace of interest rates and bond yield movement.

Key highlight for the week is the smaller net sell of RM128.7.m by foreign funds versus a massive –RM1bn in week 41.

Week 43 – focus on earnings and US interest rates

On the local front, we expect the market to focus on corporate earnings as well as Budget 2019 to be tabled on 2 November 2018. The mid-term review of 11MP has provided some clues, i.e. cut in development expenditure, on government’s policies going forward. On the external front, according to minutes released Wednesday, the Federal Reserve officials remain convinced that continuing to gradually increase interest rates is the best formula to preserve a steady economy, hence

Source: BIMB Securities Research - 22 Oct 2018