Positive Sentiment May Take A Pause

The FBM KLCI closed above the 1,500 psychological level with high conviction price
action, continuing its winning streak for the sixth session led by the banking
heavyweights. Also, the US stock markets marched stronger for the session ahead
of the FOMC meeting as well as earnings releases from the Technology giants this
week. However, as the Hong Kong court orders liquidation of China’s Evergrande
Group, we believe it may cause the overall sentiment to turn negative at least for the
near term, translating to potential profit taking mode on the local front. Meanwhile,
on the commodity markets, Brent oil maintained above the USD80/bbl amid the
ongoing tension in the Middle East region, but the upside was capped due to the
liquidation order of Evergrande.

Sectors focus: Profit taking activities may emerge within the recent strong rally
sectors such as the Construction and Property sectors following Evergrande
episode. However, with YTL winning another contract in Singapore, that should
provide support towards the Utilities sector. We expect the buying interest to build
up within the Plantation sector with firmer CPO prices recently. Also, the O&G sector
is likely to be on the radar as the Brent oil price is above USD80/bbl.

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