FTSE Bursa Malaysia KLCI (.KLSE) Investors are concerned about the health of the global economy

FTSE Bursa Malaysia KLCI (.KLSE) Investors are concerned about the health of the global economy

FTSE Bursa Malaysia KLCI (.KLSE) Investors are concerned about the health of the global economy

BANKING stocks fell the most in nearly three months yesterday, dragging the FTSE Bursa Malaysia KLCI (FBM KLCI) lower for the third consecutive day as a weaker lending outlook and external economic figures hit investor sentiment.

The Kuala Lumpur Financial Index (KLFIN) slid 0.82% or 133.34 points to close at 16,059 yesterday, marking its biggest move since falling 1.07% on May 7, according to Bloomberg.

Meanwhile, the benchmark FBM KLCI was 7.82 points or 0.48% lower at 1,634.87, after hovering largely in the red throughout the day as financial and plantations stocks pushed the key index down. The MSCI AC Asia Pacific Index, however, advanced 0.15%.

“The FBM KLCI has turned bearish. Investors are concerned about the health of the global economy as there was little progress made in the ChinaUS trade talks during market hours and the weak trade numbers from Singapore did not help,” said an analyst with a local brokerage.

Public Bank Bhd contributed the most to KLFIN’s decline, falling 1.35% or 30 sen to RM21.90, while Syarikat Takaful Malaysia Bhd had the largest drop of 4.54% or 29 sen to RM6.10.

Malayan Banking Bhd slipped 0.92% or eight sen to RM8.65, CIMB Group Holdings Bhd lost one sen to settle at RM5.08, Hong Leong Bank Bhd was down 1.32% or 24 sen at RM17.96, while Hong Leong Financial Group Bhd fell 42 sen or 2.2% to RM17.98.

“Banking stocks outperformed the market in 2018, but are on a downtrend this year on suspected profit-taking, among other factors,” he told The Malaysian Reserve when contacted.

This is in spite of the sector’s fundamentals remaining intact with healthy earnings and strong asset quality, while return on equity is still performing ably, he said.

“We observe many banking stocks performing below their pricing averages and this can only be explained by weak sentiment in the industry, as opposed to anything fundamental.”

Since the start of the year, KLFIN has fallen 7.15%, while the FBM KLCI retreated by 3.3%.

RHB Bank Bhd brought the biggest boost with a 1.1% jump to RM5.50, buoyed by news of a potential sale of its insurance business.

Manulife Holdings Bhd posted the largest gain yesterday, climbing 8.95% to RM2.80, whereas AMMB Holdings Bhd added 0.48% to reach RM4.23.

RHB rose on news that it had received the central bank’s approval to begin talks with Tokio Marine Asia Pte Ltd for a potential sale of its majority stake in RHB Insurance.

In a statement to Bursa Malaysia yesterday, the country’s fourth-largest lender by assets said Bank Negara Malaysia (BNM) in a letter dated July 29, 2019, stated that it “has no objection for the company to commence negotiations with Tokio Marine in relation to the proposed disposal of up to 94.7% of its equity interest in RHB Insurance”.

The central bank’s approval for talks to begin is valid for six months from the date of BNM’s letter.

“Pursuant to the Financial Services Act 2013, the relevant parties will be required to obtain the prior approval of the minister of finance with the recommendation of BNM before entering into any definitive agreement to effect the proposed disposal,” RHB added.

Accordingly, a detailed announcement on the proposed disposal will be made upon execution of any definitive agreement for the proposed disposal.

Shares of RHB — which have jumped 3.97% year-to-date — closed at RM5.50 yesterday, valuing the firm at RM22.06 billion.

Bursa Malaysia was closed on Tuesday for a public holiday to commemorate the installation of Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah as the country’s 16th Yang di-Pertuan Agong.

Overall, the bias in prices is: Downwards.

The projected upper bound is: 1,660.83.

The projected lower bound is: 1,618.91.

The projected closing price is: 1,639.87.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 31.2931. This is not an overbought or oversold reading. The last signal was a buy 7 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 37.20. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 20 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -154.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 6 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 17 period(s) ago.

Rex Takasugi – TD Profile

FTSE BURSA KLCI closed up 4.200 at 1,639.070. Volume was 25% above average (neutral) and Bollinger Bands were 3% wider than normal.

Open     High      Low     Close     Volume___
1,628.8001,639.1301,627.9501,639.070 142,362,800

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period     50-period     200-period
Close: 1,649.18 1,654.51 1,671.43
Volatility: 7 8 11
Volume: 122,934,064 116,969,344 124,422,176

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FTSE BURSA KLCI is currently 1.9% below its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume out of .KLSE (mildly bearish). Our trend forecasting oscillators are currently bearish on .KLSE and have had this outlook for the last 10 periods.

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