Tracking the bullish performances across most of the regional markets, the FBM KLCI concluded Friday with a significant rebound as the market was cheered by China’s reopening hopes. With the Wall Street turning positive last week, we expect the local front to trade positively ahead of the GE15 as well as the upcoming financial reporting period. However, we expect investors to stay cautious nearer to the announcement of the US inflation rate as that may dictate the Fed’s view and direction of the markets going forward.

The FBM KLCI plunged after the hawkish remarks from the US Fed; foreign investors turned net seller as outflows from Malaysia accelerated (5-day net foreign selling: -RM114.5m). We believe the local bourse performance may be impacted by the gloomy sentiment over the near term as investors anticipate further interest rate hikes by the US Fed to tackle inflation, contributing to the recession fears. However, investors may position themselves ahead of the GE15 event and the November reporting season.

The FBM KLCI rebounded as investors saw the recent selldown as a buy-the-dip opportunity, positioning for the GE15 event, but the trading activities was relatively quiet as investors remained cautious prior to the US Fed’s FOMC meeting and BNM’s meeting. Nevertheless, we expect the selling pressure may emerge in the Asian stock markets after the US Fed Chairman Jerome Powell reiterated the hawkish stance to combat stubbornly-elevated inflation, which may dampen the attractiveness on interest rate sensitive sector such as technology.

Prospects remains buoyant as KGB is equipped with an outstanding orderbook of approximately RM2.22bn. This which represents an orderbook-to-cover ratio of 4.3x against FY21 revenue of RM517.7m that will provide strong earnings visibility over the next 2 years. Meanwhile, tenderbook stays healthy at approximately RM1.50bn that is skewed towards the semiconductor space.

Opcom Holdings Bhd (OPCOM) engages in the (i) manufacturing of fibre optic cables, provision of engineering services to telco and power utilities industries as well as (ii) manufacturing and trading of cable filling and flooding compounds for export markets.

The FBM KLCI fell, bucking the positive performance across the regional bourses as investors’ risk appetite waned ahead of the US Fed’s interest rate decision. The local bourse may set for further profit taking as investors may brace for potential interest rate hike by the BNM. Meanwhile, Finance Minister commented that there will be possible adjustments for the Budget 2023 when it is re-tabled.

Moving forward, ECONBHD's outstanding orderbook stood at approximately RM450.0m; represents an unbilled orderbook-to-cover ratio at 1.2x against FY22 revenue of RM373.4m will provide earnings visibility over the next 18 months. Meanwhile, tenderbook remains relatively stable at approximately RM400.0m.

The FBM KLCI ended positively in tandem with the regional markets, thanks to the telecommunication sector as well as the plantation heavyweights. However, the profit taking activities on Wall Street after a significant rally may cap the upside potential on the local front. We expect the investors may take a cautious stance ahead of the important FOMC meeting that will conclude on the 2-Nov (US time). Meanwhile, traders may focus on GE15 theme and position within GLC-linked companies.