• The KLCI closed at 1,683.53, down by 17.5 points versus the prior week.

• Net foreign inflow continued for the 4th straight week, albeit a smaller amount of RM146.8m versus RM455.6m in the preceding week.

• Net buying in January was dominated by foreign funds with RM1.0bn, whilst local institutions were net sellers with RM1.3bn.

• A short trading week ahead for Malaysia amidst mixed equity market’s short-term outlook at the moment – EM currencies look to extend gain, but a possible US-China trade resolution remains elusive.

Markets reacted on mixed news

The market set off the week positively culminating with the Federal Reserve’s statement on Wednesday indicating a policy shift in interest rates and reduction of its balance sheet. The KLCI rose to the year’s high on Monday, but fell by 1% for the week – the first weekly loss since 3 Jan 2019.

Corporate earnings announcements had an impact on the market as LC Titans reported a surprising net profit decline of 97% yoy. On the positive side, Westports and F&N saw earnings coming in within estimates.

The largest impact on regional markets was the US criminal charges brought against Huawei that could jeopardise the US-China trade talks. The 2-day trade meeting in the US ended without anything significant.

Trade war still casting shadow on markets

It will be a short week trading week for Malaysia – due to the Chinese New Year Holidays – and several markets in the region as well. There is likely a lull in corporate earnings reporting for the week.

Friday’s US NFP saw a strong 304K jobs created in December, but given the Fed’s shift toward “patience” it is premature to draw conclusions from the data. We believe that the US-China trade relations remain crucial for the markets at this point, and to lift some of the global economic gloom. We expect markets will also be influenced by the USD performance.

Source: BIMB Securities Research - 4 Feb 2019