TECHNICAL AND FUNDAMENTAL ANALYSIS

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FBMKLCI Weekly Report - May 26, 2019

May 26, 2019

FBMKLCI Technical Analysis

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- Due to escalating tension of trade war in the past 2 weeks, FBMKLCI extended the lost and traded below 1600 level on May 24, 2019.

- It is undeniably that the US-China Trade War impacts worldwide economic growth. However, there is a currency war just happens in Asia Markets as well.

- Instead of worry about how Huawei able to survive after US placed restrictions on US firms doing business with Chinese tech giant Huawei on grounds of national security, we should put our concerns on USDMYR movement as well.

- CNY and CNH are depreciating against US Dollars to dilute the impact of Tax Tariff imposed on exported goods from China to the US.

- Korea Won and Taiwan Dollars are extending their depreciation against US Dollars due to lower GDP in Korea and markets expect Taiwan Semiconductor Manufacturers might be one of the victims in the US - Huawei incidents.  

- From the technical analysis perspective, FBMKLCI RSI showed stagnant below 20 (Oversold) in the past 8 trading days which reflected FBMKLCI might drop lower in near futures.

- Resistance R2: 1654.26

- Resistance R1: 1618.32

- Support S1: 1589.79

- Support S2: 1572.03

 

USDMYR Technical Analysis

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- There is a serious depreciation trend of MYR since the beginning of May 2019.

- PS: For those company which holds a high position of foreign loans and concentrates in local business segment with natural balance sheet/Cash flow hedging, they might face a difficulty to serve their interest and/or principal installments in short-period.

- Resistance R1: 4.200

- Support S1: 4.1750

 

Economic Analysis

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- PMI becomes higher @ 49.4 (Previous: 47.2) which is a good indicator of good economic growth as PMI is a leading indicator in economic perspective. 

- Malaysia PMI Key Points (Sources: PMI): Output and new orders indices jump higher amid export gains; Business confidence hits five-and-a-half-year high; Employment growth at a seven-month high.

- BNM reduced OPR from 3.25% to 3.00% on May 07'19 and we able to expect the effect of lower funding cost in the coming end of Q2,2019 after the higher value of M1 and M2.

- Brent crude oil per barrel recorded lower @ USD67.47 after higher record of US Oil inventory on May 22, 2019, and markets expect to slow down in global of economic.

- Keep in view the outcome of G20 Meeting 2019!!

 

 

 

 

 

 

 

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