Weak re­sult sea­son weighs on FBM KLCI

The Star Malaysia - StarBiz - - News - By DANIEL KHOO [email protected]­tar.com.my

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.

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