Faced with a lack of domestic catalyst and being weighed down by external geopolitical concerns, the local market is unlikely to make any headway this week. Technically speaking, while the FBMKLCI has re-tested the 1,835/30 support zone last week, we suspect any relieve rebound from here could be capped at 1,855 as the market needs fresh catalyst to lift the index above this level, which appears unlikely in the near future. Hence, we advocate investors to be more selective in stock picks. Portfolio-performance-wise, we had a mixed week but all the portfolios still outpaced the benchmark index by 26-114bps WoW or a whopping 1,472-2,094bps YTD outperformance. We are looking forward to publish our 4Q14 Strategy report this week, which should give investors a better guidance on where to put  their  money for the next 3-6 months. Stay tuned!

A tough call. As there is a lack of fresh catalyst to spur market sentiment, the local market is expected to continue facing tough time ahead. Not helping is the worsening of conflict in Russia-Ukraine and the Middle East and concerns of global economy growth propsect which do not bode well for the market sentiment. Technically speaking, while the FBMKLCI has re-tested the support zone of 1,835/30 last week, we suspect any relief rebound from here could be capped at 1,855 as the market needs new catalysts to lift the index to above this level, which is unlikely in the near future. While awaiting our 4Q14 Investment Strategy to be released this Wednesday, we continue to prefer the “Buy-on-Weakness” strategy on selective stocks.

The market hit 6-month low. Last week, the local market started the week on a soft note which was in line with regional market performance which reacted negatively to data suggesting a slowing Chinese economy. The local market fluctuated between positive and negative territories for the rest of last week before the FBMKLCI hit its 6-month low last Friday on signs of worsening conflict in Russia-Ukraine and the Middle East. In fact, foreigners remained net sellers for the 9th consecutive day last Thursday with a total net outflow of RM127m. At last Friday’s closing bell, the barometer index ended off its 6-month low to settle at 1,840.50, which was 8.99pts or 0.49% decline from the previous week. The decline was led by MAYBANK (-1.89%), PBBANK (-0.73%) and SKPETRO (-2.60%). On Wall Street, US stocks also sank last week no thanks to geopolitical concerns while customers’ dissatisfaction of Apple’s brand new iPhone 6 led to a sharp decline in technology stocks. Investors’ “wait-and-see” attitude while waiting for the release of US GDP data also contributed to the lacklustre market performance.

Mixed portfolio performance, which was in line with the prevailing market sentiment. Our weekly gainer was DIVIDEND YIELD Portfolio as its fund value rose 0.66% over the week against the FBMKLCI’s -0.49%. This indicated that in time of uncertainty, income yielding stocks remain the top choice for investors. On the other hand, fund value of THEMATIC Portfolio inched up slightly by only 0.08% WoW while the GROWTH Portfolio was the only loser as its fund value declined 0.22% over the week. In all, the portfolio performance was helped by small cap dividend stocks like MITRA (+1.59%) and MAGNI (+0.63%) and big cap yielding stock DIGI (+1.03%). YTD, despite a weekly decline in value, the GROWTH Portfolio continued to top the gainer’s list with 23.71% YTD total returns which was far more superior to the 30-stock index’s 2.77%. On the other hand, the performance of THEMATIC and DIVIDEND YIELD Portfolios remained commendable with YTD total returns of 22.53% and 17.49%, respectively. Given that we had liquidated some position in the past weeks, we are now better positioned to scout for investment ideas should any opportunity arises in the coming weeks.

Source: Kenanga