The local market is still in a consolidation mode although the benchmark index is now in overbought position. Not helping things is the uninspiring results season which concluded last Friday, which may exert a negative impact on market sentiment while the consensus index target may be toned down given the overall earnings disappointment. This week, the local bourse is likely to trade range-bound between 1,861 and 1,882. Meanwhile, small cap and third liner stocks may face profit-taking activities after weeks of strong rally. While awaiting our 4Q14 Investment Strategy to be released later this month, we continue to prefer the “Buy-on-Weakness” strategy with an ideal buying level of below 1,835 for now. Portfolio-performance-wise, overall performance was mixed but our portfolios still outpaced the benchmark index by 8-112bph WoW. YTD, our portfolios outperformed the FBMKLCI index by 1,348-1,856bps.

Still a waiting game. As the earnings reporting season, which just concluded last Friday, failed to provide catalyst to spur market sentiment, investors would have to seek fresh leads before making the next move. Such a scenario will maintain the local market in its consolidation mode this week with range-bound trading between 1,861 and 1,882. Meanwhile, small caps and penny stocks may face some profit-taking activities soon after weeks of strong rally. As we are now entering the last month of the 3Q14, upcoming 4Q14 investment strategy reports may set the anticipated tone for the market. We suspect cosensus is likely to cut their index target given the disappointing set of 2QCY14 results report card. While awaiting for our 4Q14 Investment Strategy to be released later this month, we continue to prefer the “Buy-on-Weakness” strategy with an ideal buying level of below 1,835 for now.

Another see-saw week. Last week, the local market started trading on a soft note as investor locked in their profits after a strong performance with heavy volume the previous week. The FBMKLCI then moved up slowly in tandem with regional markets performance, which was backed by encouraging US economic data. But, investors reluctant to hold their position last Friday ahead of the long weekend sent the benchmark index back to negative territory as the key index fell 4.88pts WoW or 0.26% to settle at 1,866.11. Last week’s top laggard, PCHEM (-3.67%) was the latest Petronas-related stock sell-down, as its share price hit a 52-week low last Friday. Both PETDAG (-7.37%) and PETGAS (-0.09%) had already gained some ground in the past two weeks from their recent new lows. On Wall Street, US stocks were flattish last week with the exception of S&P 500 which hit fresh record high at above 2,000-level last Wednesday. Market sentiment was cheered by encouraging economic data but gain was mitigated by re-emerging tensions in Ukraine during the later part of the week.

Mixed portfolio performance; one portfolio registered negative weekly returns and two others recorded weekly gains. Even then, the portfolios still outperformed the barometer index. THEMATIC Portfolio was the weekly top gainer with 0.86% weekly gain, extending YTD total returns to 21.37% while fund value of DIVIDEND YIELD Portfolio rose 0.25% over the week to register 17.25% YTD total returns. GROWTH Portfolio was the only portfolio suffering a negative weekly return of 0.18%, reducing its YTD total returns to 22.33%. The YTD total returns for FBMKLCI index was reduced to 3.77% after a 0.26% weekly loss last week. FIBON (+5.15%) was the main contributor to the fund performance last week. After a 0.90% contraction in asset value in previous week, FIBON (+5.15%) contributed 0.75% gain to all portfolios this week. Although the three funds are still making losses of 0.90% in holding 30,000 shares each, we believe this stock could contribute positively to the funds given the upcoming expected contract flows coupled with the earnings normalisation of its Indonesia unit in the recent quarter after a two bad quarters.

Source: Kenanga