The local market remained flat last week as investors stayed at bay ahead of the Raya break. The 2½ trading days saw the FBMKLCI fell marginally by 0.17% to settle at 1,779.32 as investors were generally reluctant to take positions while the weakening Ringgit continued to impact negatively on companies with borrowing dominated in foreign currencies. In tandem with the local market, the performance of our portfolios was also sluggish with  these three portfolios fluctuating within 1%. On YTD basis, the three portfolios outperformed the FBMKLCI by 466-1957bps. This week, we still expect a subdued market on spill over holiday mood. Also, the technical indicators are currently weak with more downward bias. Fundamentally, we believe that our 3Q13 “Sell on Strength” Strategy remains valid as the FBMKLCI reaches 1,810 as 3Q is a seasonally weak quarter especially in the month of August and September. However, investor should start to accumulate again when the index falls below 1,720.

All in holiday mood last week.  The performance of the local market was lacklustre as investors were mainly sidelined in the shorter working week ahead of the Raya holiday. The FBMKLCI fell marginally by 3.19pts or 0.17% to close at 1,779.32 last Wednesday noon. This was mainly driven by SKPETRO (-2.6%), MISC (-4.3%) and PBBANK (-0.6%) but gains on MAXIS (+2.1%), PETDAG (+4.7%) and BAT (+2.2%) helped to mitigate the losses. TENAGA (-0.7%) continued to face selling price as the strengthening of greenback would spike up its fuel and borrowings costs. On the other hand, investors took profits on GENM (-4.9%) after its previous price rally after the announcement of its tie-up with 20^th Century Fox to revamp its hilltop theme park. On Wall Street, the US market started the week with three straight days of losses after the Dow and S&P500 hit fresh record highs in the previous sessions. However, bargain hunting on tech-stocks led by Microsoft reversed the downtrend to positive territory last Thursday. Thus far, the US earnings report card remains encouraging with two-third of the companies meeting expectations.

DIVIDEND YIELD Portfolio topped the weekly’s gainer list. Despite a lacklustre week, investors snapped up dividend stocks for income in a generally directionless market. As such, our  DIVIDEND  YIELD  Portfolio  posted  a  0.74%  gain  in  fund  value,  the  only  positive  return among the three portfolio, against the -0.17% loss in the benchmark index. In fact, all the four invested stocks in this portfolio registered positive returns over the week. On the other hand, THEMATIC and GROWTH Portfolios reported -0.04% and -0.73% performance, mainly led by REDTONE-WA (share price -1.9%) which continued to face profit-taking after a two-week impressive  rally.    Nonetheless,  the  40,000  units  each  of  REDTONE-WA  in  THEMATIC  and GROWTH Portfolios still registered 27.16% hike YTD in fund values.

THEMATIC Portfolio remained the top performer.  Following a weaker week, total YTD returns for both our THEMATIC and GROWTH Portfolios were reduced to 26.89% and 23.70% from 27.94% and 24.18% previously. These still outpaced the FBMKLCI’s total YTD returns of 7.32%. On the other hand, although the four stocks invested in the DIVIDEND YIELD Portfolio reported total YTD unrealised loss of RM1,520 or -2.39%, the DIVIDEND YIELD Portfolio still registered a total YTD returns of 11.98% after taking into account the RM4,274 realised gains and RM9,228 dividends. 

Still a soft week ahead as holiday mood remains this week. The just concluded Raya break may not boost trading volume as the festive mood spills over. However, the 2H of August may pick up trading pace as the end of the 2QCY13 reporting season may provide better investment clarity. Technically, the 1,788 resistance remains but with downward bias. Together with the seasonally weaker 3Q especially in August and September, we believe that our 3Q13 “Sell on Strength” Strategy remains a valid strategy as the FBMKLCI reaches 1,810. However, investor should start to accumulate again when the index falls below 1,720. 

Source: Kenanga