PETALING JAYA: Renewed optimism on the rubber glove and healthcare sector saw another fierce rally at play, with the FBM KLCI swept up alongside other regional markets as an impending global shortage of gloves is anticipated.
Investors continued to chase glove-related and healthcare stocks with some hitting limit-up.
Hartalega Holdings Bhd rose 64 sen to RM13.18, bringing its market capitalisation to RM44.62bil, and now making it the sixth largest company on Bursa Malaysia.
The momentum started in the morning when Macquarie Research issued a report on Top Glove Corp Bhd with a new target price of RM20.50 for the counter.
The world’s largest glove producer surged by some RM2.24 to RM15.54 at yesterday’s closing.
Macquarie’s new target price was based, among others, on Top Glove allocating 10% of its capacity capacity for spot orders, and higher average selling prices versus its initial guidance.
As of midday, Bursa was up 15.14 points to 1,488.39. Nonetheless market breadth was negative.
The FBM KLCI ended the day up 16.89 points to 1,490.14 on volume of 10.31 billion shares valued at RM6.73bil.
The FBM KLCI was already showing bullish signs last week, as it added 36.49 points or 2.5% for the week.
Trading value was a hefty RM9.3bil, a new record for Bursa Malaysia, while trading volume was nine billion shares.
OANDA senior market analyst for Asia Pacific, Jeffrey Halley said that Asia is off to a “rollicking start to the week with equities performing strongly and currency markets rotating out of haven US Dollars.”
He said the turbo-charging of bullish sentiment has multiple drivers starting with President Donald Trump.
“Although scenes showing numerous riots across the USA dominated headlines this weekend, it is what President Trump announced on Hong Kong on Friday that really mattered to financial markets; or more correctly, what he didn’t say, ” said Halley.
As expected, the US President withdrew Hong Kong’s special status over the new China imposed security law.
“What he did not do, however, was withdraw from the US-China phase one trade agreement signed in January.
“Nor did he impose sanctions on Chinese officials or persons connected to the regime.
“The collective sigh of relief in Asia is palpable this morning, ” said Halley.
Meanwhile CGS-CIMB head of retail research Kong Seh Siang’s longer term view remains bearish and hence he has kept to his “sell on strength” strategy for long term traders until now.
“We have earlier mentioned that retailers appeared to have showed their hand with the recent ‘all-in’ (in April and May) and historically, this group of traders rarely led the ‘recovery’ phase, ” explained Kong.
He believes that the bullish bus will only head to its destination when it is ‘empty’ and not filled to the brim – contrary to popular market beliefs.
A pullback sometime in the near future is going to shake out the ‘weak hands‘ and leave only the ‘strong hands’ to ride on the upcoming bullish bus.
Kong feels that a more reliable strategy would be to buy when the market is trending up, for example when it is above its 200-day exponential moving average.
According to MIDF Research, international investors sold RM663.8mil net of local equities for the week ended May 29, compared to the RM714.7mil disposed in the week before.
For the month of May 2020, foreign investors disposed RM3bil net, the second highest monthly foreign net outflow so far this year after March.
This brings the year-to-date foreign net outflows from Malaysia to RM13.3bil which is still the third smallest foreign net outflow among the seven Asian markets we monitor.
In terms of participation, only foreign investors saw a substantial weekly increase in their average daily traded value (ADTV) to reach RM3.5bil.
This was the largest weekly ADTV since the week ended June 1,2018.
Did you find this article insightful?
100% readers found this article insightful