Bearish Bias
Since the KLCI crashed in March 2020, all of us in the Malaysian market know that what's driving the stock market are mainly the gloves and the healthcare counters.
Out of 30 KLCI index components, only TOPGLOV and HARTA are the ones driving the upward momentum since March to July.
We have also experienced quite a major selldown in August and September for gloves and healthcare. This is a huge culture shock as we also have many new traders in the market this time around.
However, what upcoming catalysts would drive the remaining 28 KLCI index components? Can the market continue going uptrend if gloves were to remain flat?
The major sectors for the remaining 28 index components are:
- Banking / Financial: HLBANK, MAYBANK, PBBANK, AMBANK, CIMB, HLFG, RHBBANK
- Telecommunication: MAXIS, DIGI, AXIATA
- Construction: IOICORP, HAPSENG, SIME
- Plantation: SIMEPLT, KLK
- Oil & Gas / Petrochemical: DIALOG, PETGAS, PCHEM, PETDAG
- Hospitality: GENM, GENTING, AIRPORT
- Necessities: TENAGA, NESTLE
By categorizing these sectors, it does not look like we have any positive catalysts to be expected.
In particular, one may argue that the end of moratorium means that banks can start collecting their interest therefore they are expected to do better soon. However, it is observed that in market there are many people who are still struggling financially. Therefore non-performing loans (NPLs) are likely to increase and this will soon serve as a negative catalyst, causing a further decline in the KLCI.
It also does not look like any other positive catalysts would be present in other sectors.
Based on the charts, we are entering a consolidation phase with resistance of 1520 and support 1475. If support of 1475 is broken, we are looking at a decline all the way towards the 1370-1400 zone.
In view of the above, I am myself holding the KLCI put warrants with expiry end of March 2021 with strike price of 1550.
Out of 30 KLCI index components, only TOPGLOV and HARTA are the ones driving the upward momentum since March to July.
We have also experienced quite a major selldown in August and September for gloves and healthcare. This is a huge culture shock as we also have many new traders in the market this time around.
However, what upcoming catalysts would drive the remaining 28 KLCI index components? Can the market continue going uptrend if gloves were to remain flat?
The major sectors for the remaining 28 index components are:
- Banking / Financial: HLBANK, MAYBANK, PBBANK, AMBANK, CIMB, HLFG, RHBBANK
- Telecommunication: MAXIS, DIGI, AXIATA
- Construction: IOICORP, HAPSENG, SIME
- Plantation: SIMEPLT, KLK
- Oil & Gas / Petrochemical: DIALOG, PETGAS, PCHEM, PETDAG
- Hospitality: GENM, GENTING, AIRPORT
- Necessities: TENAGA, NESTLE
By categorizing these sectors, it does not look like we have any positive catalysts to be expected.
In particular, one may argue that the end of moratorium means that banks can start collecting their interest therefore they are expected to do better soon. However, it is observed that in market there are many people who are still struggling financially. Therefore non-performing loans (NPLs) are likely to increase and this will soon serve as a negative catalyst, causing a further decline in the KLCI.
It also does not look like any other positive catalysts would be present in other sectors.
Based on the charts, we are entering a consolidation phase with resistance of 1520 and support 1475. If support of 1475 is broken, we are looking at a decline all the way towards the 1370-1400 zone.
In view of the above, I am myself holding the KLCI put warrants with expiry end of March 2021 with strike price of 1550.
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