MARKET REVIEW

Asia’s stock markets ended higher prior to the high-level trade talks later this week in Washington between the US and China. Despite the US Commerce Department expanded its trade blacklist to include 28 Chinese firms and public security bureaus, restricting their ability to do business with American companies, regional equities managed to gain traction; the Shanghai Composite Index and Hang Seng Index rose 0.29% and 0.28%, respectively, while Nikkei 225 advanced 0.99%. Meanwhile, the FBMKLCI ended flat at 1,558.79 pts as investors were on the sidelines ahead of the Budget 2020 and high level trade talks this week. Market breadth was positive with 428 gainers vs. 381 losers, accompanied by 2.41bn shares traded for the session, valued at RM1.71bn. On the broader market, construction shares such as Gadang, Econpile, Jaks were traded actively higher, while the construction sub-index jumped 2.04% ahead of the Budget 2020 (11 Oct).

Wall Street closed sharply lower amid growing pessimism on the upcoming trade talks the US widened its trade blacklist to include some of China’s top artificial intelligence firms on Monday, and China’s foreign ministry may retaliate after this blacklist expansion. Also, Chinese Vice Premier Liu He, who will lead the trade delegation, may not carry the title of “special envoy”, signalling he has not received any specific instructions by President Xi. The Dow and S&P500 lost 1.19% and 1.56%, respectively.

TECHNICAL OUTLOOK: KLCI

The FBM KLCI moved sideways over the past two trading days after the sharp fall last week, and the MACD Indicator is still hovering below zero. Both the RSI and Stochastic oscillators are still in the oversold region. Despite the momentum oscillators suggesting that the key index is oversold and could be due for a technical rebound, the rebound move is likely to be limited around the resistance along 1,580, while the support is set around 1,550, followed by 1,530

Source: Hong Leong Investment Bank Research - 9 Oct 2019