The FBMKLCI is expected to continue to trade in a sideway consolidation mode ahead of the upcoming 3rd U.S. FOMC meeting. Should the next quantitative easing measures be higher than expected, it could potentially spark off another round of fund outflow from the emerging markets. The benchmark index is still trapped in the 1,840-1,869 range; only a breakout from either side could provide a clearer technical picture. Our model portfolios were mixed last week. On YTD basis, THEMATIC (+481bsp) and GROWTH portfolios (+463bsp) outpaced the benchmark index, but DIVIDEND YIELD underperformed the market by 54bsp.

All eyes will be on U.S. FOMC meeting, again. The outcome of the US FOMC meeting, scheduled to be held on 29th-30th April, is expected to provide some sort of a direction to the local as well as the global market this week. Market is expecting the Fed to maintain its rate decision (at 0.25%) but continue with the QE tapering, albeit at a slower pace (USD45b vs. USD55b in March). Meanwhile, China is scheduled to release its April’s manufacturing PMI data on Thursday, where consensus is expecting the indicator to come in at 50.4 (vs. 50.3 in March). Failure to meet with market expectation could lead the market to higher trading volatility. The benchmark index is expected to continue to be trapped in the sideway consolidation mode, at between the 1,840 to 1,869 range, before the conclusion of US FOMC meeting. A clearer technical picture will emerge when the barometer index breaks out from either side of the range.

A lacklustre week as expected. The local market experienced another tight range trading last week as the broader market continued to favour rotational plays on the small-cap and penny stocks rather than the big-cap counters. At last Friday closing bell, FBMKLCI finished at 1,860.98 points (+0.45% WoW). The top three index leaders include CIMB (+1.0% WoW); PUBLIC BANK (+1.1% WoW); and YTL (+7.2% WoW) while the laggers were MISC (-6.4% WoW); PCHEM (-1.5% WoW) and SAKP (-1.8% WoW).

Wall Street ended the week with marginal change as the heightened tension in Ukraine took the shine off the better-than-expected U.S. corporate earnings and M&A-driven gains in both European and U.S. stocks. U.S. corporate earnings profits are seen rising 2.9% in 1Q14, down from the 6.5% growth rate estimated at the start of the year, but above the low 0.6%% seen last week, according to Thomson Reuters data. At last Friday closing bell, the DJIA remained relatively unchanged WoW at 46,361.50 while the S&P 500 closed flattish at 1,863.40

GROWTH and DIVIDEND YIELD portfolios gaining traction. Two of our model portfolios outperformed the FBMKLCI last week on a week-on-week basis, with the GROWTH recording 1.1% WoW gain (vs. +0.45% in the FBMKLCI) followed by the DIVIDEND YIELD (+0.8% WoW). The former was mainly fuelled by PESTECH (up by +6.6% WoW) and RHBCAP-CR (+4.4%) while the latter was driven by DIGI (+2.3%) and BJTOTO (1.6%). The THEMATIC portfolio, meanwhile, was merely up by 0.1%, no thanks to some mild profit-taking activities in TSH (-2.1%). YTD, THEMATIC portfolio continued to take the lead and registered +6.9% return (vs. +2.1% in the FBMKLCI), followed by GROWTH (+6.7%) and DIVIDEND YIELD (+1.5%) portfolios.

Source: Kenanga