Weak result season weighs on FBM KLCI

PETALING JAYA: Bearish sentiment continued to envelope the stock market as the benchmark FBM KLCI closed lower by 4.73 points or 0.28% to 1,694.99 points as investors weighed the third quarter earnings season.

Market breadth was negative with losers outnumbering gainers by just over two times while 352 counters were unchanged and 708 counters untraded.

FBM KLCI index constituents such as Tenaga Nasional Bhd (down 16 sen to RM14.14), CIMB Group Holdings Bhd (down nine sen to RM5.81) and Genting Bhd (down eight sen to RM6.51) weighed the benchmark index while gainers included Petronas Dagangan Bhd (up 34 sen to RM25.34) and UMW Holdings Bhd (up 24 sen to RM5.64).

The local market was weighed by sentiments due to earnings and abroad for uncer- tainty that has clouded the macro outlook amid lingering concerns of the US-China trade relations.

Market analysts said a disappointment in earnings for most companies on the Bursa Malaysia could spell more downside for the market but there are still chances that the market may surprise on the upside.

“I think at the moment, the odds are more to the downside. Although we cannot also always assume that earnings will continue to disappoint as we head into the new year,” a market analyst said.

According to CGS-CIMB, the FBM KLCI had historically posted positive returns in December. The research house noted that in the past 10 years, the benchmark index recorded an average gain of 2% in that month.

“Over a 40-year period, it posted an average month-on-month gain of 3.6%. We maintain our end-2018 FBM KLCI target of 1,684 points, which is based on 15.7 times 12 months for- ward price to earnings ratio, and our top three picks are Dialog, MPI and Westports,” CGS-CIMB said in its report.

CGS-CIMB noted that the FBM KLCI underperformed the FTSE Bursa Emas or the broader market but outperformed the small-cap sector in the month of November.

The Malaysian benchmark index also underperformed the MSCI Asia Pacific ex-Japan Index by 6.9% in November.

Asian markets yesterday traded mostly in negative territory with Japan’s Nikkei 225 Index declining 2.39% to 22,036.05 and South Korea’s Kospi falling 0.82% to 2,114.35.

This is despite the Dow Jones Industrial Average posting a 1.13% overnight gain on Monday’s trade to 25,826.43 points after US President Donald Trump and Chinese President Xi Jinping agreed to a 90-day ceasefire in the ongoing trade war. The trade war between the United States and China had weighed heavily on stocks.