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DATE : 27 JULY 2020

The FBM KLCI closed down 17 points or 1.1% at 1,590 on Friday from a near two-week high reached in the previous session, as investors fear that escalating US-China tensions, alongside a spike in coronavirus cases, could hamper the global economic recovery. Beijing ordered Washington to close its consulate in Chengdu, in retaliation for being forced to shut down its consulate in Houston earlier this week. For the week, the FBM KLCI lost 0.4%.

Bloomberg reported that stocks fell with US equity futures on Friday, amid concern over escalating Sino-American tensions and worries the recovery in the world’s largest economy has stalled. Five-year Treasury yields touched an all-time low.

Beijing’s latest move further strains the increasingly fraught relationship with the US, which forced China to leave its mission in Houston earlier this week. The two superpowers have also recently clashed on trade and early handling of the coronavirus, raising fears of a protracted conflict, the report added. 

CNBC reported that mainland Chinese stocks deepened losses by the afternoon, with other Asia Pacific markets also moving lower as US-China tensions worsened on Friday.

Some of IB's analyst said,

From a technical viewpoint, they said the two glove counters could be trading sideways next week, as the Moving Average Convergence/Divergence (MACD) currently signals there is no upside momentum. 

Also, should the external factor worsen, the KLCI may trade sideways with bearish bias next week, they pointed out. 

But, from my perspective view in a short-term, I would like to highlight 5 facts, which it will defend or boost our index back to gain level by Gloves Sector and Government index-linked related :

1. Goldman Sachs settles 1MDB scandal with Malaysia for $3.9bn ( RM19 billion)

• Goldman Sachs has reached a $3.9bn (£3bn) settlement with the Malaysian government for its role in the multi-billion-dollar 1MDB corruption scheme.
• The deal resolves charges in Malaysia that the firm had misled investors when it helped raise $6.5bn for the country's 1MDB development fund.
• The settlement - the largest reached so far in the scandal - includes a $2.5bn cash payout by Goldman. The firm also said it would guarantee that the government would receive at least $1.4bn from money recovered from the scheme.

2. Global cases pass 16 millions

• The World Health Organization said more than a million cases had been recorded in each of the last five weeks, A with over 280,000 being reported on July 24 alone.
• Brazil and India had recently reported their highest daily increases, it added, while the figures remained worryingly high in the United States and South Africa.
• The US, still the hardest-hit nation, on Friday reported its second straight day of more than 70,000 new cases and over 1,000 deaths as the virus surges in the south and west.

3. Oil prices edges up on weak dollar, US-China tensions weigh

• Oil prices edged higher on Friday, supported by a weaker dollar, though tensions between the United States and China and wider economic uncertainty weighed.
• A weaker dollar usually spurs buying of commodities priced in dollars such as oil because they become cheaper for holders of other currencies.
• The US economic outlook has darkened in the past month amid renewed lockdowns in some states to tackle surging coronavirus cases.

4. Upcoming great quater result in August as a benchmark for gloves sector to boost the Index FBM KLCI

• Most of gloves company will release their result as a earlier 4th August for Hartalega.
• So I am foresees again same as May month repeated. No more cheap gloves prices in August.
• My plan still maintained as glove sector the potential and beneficiaries from this pandemic till next year March FY21

5. Vaccines spurs in global lately still looking for positive proven and it's intension to boost and defend economy

• More than 150 countries engaged in COVID-19 vaccine global access facility.
• Seventy-five countries submit expressions of interest to COVAX Facility, joining up to 90 further countries which could be supported by the COVAX Advance Market Commitment (AMC).
• The goal of COVAX is by the end of 2021 to deliver two billion doses of safe, effective vaccines that have passed regulatory approval and/or WHO prequalification.
• Fauci expects U.S. vaccine 'widely available' in 2021 and mostly researches of coronavirus vaccine expected by mid-next year.

All above factors, I am foresees the gloves sector strongly theme in FBM KLCI. The Malaysian warrants market hit yet another record high turnover last 7-days with RM1.98bil traded, averaging at about RM396mil per day. The share prices of glove makers swung wildly through the week, their increased volatility and stream of news flow further attracting investors’ interest.

We also saw lately, more companies in Bursa diversified to business related to pandemic demanding such as face masks, PPE and gloves. Same as I keep highlight year 2020, only the rubber sectors will have a big jump and bright prospect for now.

Last friday, the market breadth was negative today, with 625 losers versus 367 gainers, while 481 counters remained unchanged. Some 9.89 billion securities worth RM5.19 billion were traded across the exchange. Among top losers were Top Glove and Hartalega, which sank 2.6% and 1.8% to RM25.44 and RM17.68, each.

MY LATEST  TARGET PRICE

RUBBER GLOVE PRODUCERS

Rubber glove manufacturers dominated Bursa Malaysia’s top gainers’ list on rising demand for healthcare products due to the Covid-19 pandemic. The Malaysian Rubber Board (MRB) said the Covid-19 pandemic will drive rubber prices higher following an increase in the demand for Malaysian rubber gloves this year. It said economists projected that Malaysia would control 65 per cent of the global rubber gloves market in 2020.

A 3.0 % rise from the current 62 %, equivalent to RM3 billion additional income for the country, although this would depend on the developments in the battle against the pandemic.

Rubber price is controlled by the global market. Generally, looking at the historical performance of the industry, it goes up and down, and currently it is on the down cycle. The rubber price fell from RM3.00 per kg a few years ago to RM1.70 a kg currently, causing hardship for those involved in the rubber industry, particularly the rubber-tappers and smallholders.

Demand for natural rubber increases, supply decreases

World supplies of natural rubber fell 5.1% in the first four months of 2019, to 3.95 million metric tons from 4.16 million in the first four months of 2018, according to the latest figures from the Association of Natural Rubber Producing Countries.

During the same period, world NR consumption increased 1% to 4.59 million tons from 4.54 million, the ANRPC said in the April 2019 issue of Natural Rubber Trends & Statistics, which appeared June 30.

Let's see what happens to my priority gloves currently. Which I am still firm and optimist "The Gloves Will Changes Your Life 2020".

BIG-4 GLOVES

For big-four gloves such as Top Glove, Harta, Kossan adn Supermx. You can visit this link and subscribe with Kim's Group Trader at LINK HERE

COMFORT - Not yet confirm on the breakout out. As you can see it has tested few time to break it. Let us monitor can it break the RM4.20 next week.

RUBBEREX - The chart look nice and stay above the moving average line beautifully. As long as it follow the uptrend. Once day it will go back to touch the previous high around RM4.55

HLT - Buying keep coming in these two days and the chart pattern has continued it uptrend. Soon will going up and touch the resistance level (green) around RM1.00. Follow KGT to get more inside for best entry price.

CAREPLUS - Create its new high on the QR announcement on last Friday. It create a new bullish resistance (green)and support(yellow) level. Pricing range 2.25 - 2.66. Can it go higher…possible? As we look at forward PE for 2020 by taking this quarter results as ref. The average yearly PE can be around 15-20. As long as it is below PE 30 consider good. So mean, it can go higher from the closing price 2.46 from last Friday.