Weekly Market Update - 8 May 2017

Market Outlook

Equity Market Outlook

• First on French Presidential election, landslide victory by Emmanuel Macron who secured 65% of total votes removed the concerns of further breakup of Eurozone.
• US’s April non-farm payroll increase by 211,000 versus consensus estimate of 185,000. This lifted the expectation of Federal Reserve to do another 25bps rate hike in June’s Federal Open Market Committee (FOMC) meeting.
• Hong Kong’s March Retail Sales grew by 3.1%, which was the first positive growth after 24 consecutive months of declining. Luxury items like jewelry and luxury watches are the main drivers for the growth.
• Back to Malaysia, March Export grew by 24% yoy driven by Electrical & Electronics and Petrochemical sectors. March Imports grew at faster pace of 39.4% yoy. This showed the sign of robustness in Malaysia economy.
• Malaysia Ringgit +2% during the month of April mainly driven by higher foreign inflows to Malaysia markets. There will be a Monetary Policy Committee (MPC) meeting on 12 May but we expect no hike by Bank Negara Malaysia on this meeting.
• We continue to be positive on regional markets performance in coming months given the better clarity post 1Q17 earnings release in May which is expected to be positive. Sectors which we are favouring are infrastructure, building materials, financial and selective manufacturing sectors.

Fixed Income Outlook

• As expected, Fed held rates unchanged and this was positive for the Emerging markets as we saw foreigners nibbling at the shorter end of the curve in the government papers.
• ​Malaysia sovereign bond market consolidated narrower especially on the shorter end of the curve (5years and below).
• ​Inaugural 30 yr Government Investment Issue (GII) launched attracted 2.3x book to cover ratio.
• Strategy continues to take profit and to add on to buy government papers on dips.

Source: Lipper for Investment Management, as at 5 May 2017. Past performance is not necessarily indicative of future performance. 

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