The FBM KLCI finished lower on the back of cautious undertone ahead of the US inflation data that will be released on the 10th of August. Given the market has rallied over the past two months, investors will be staying sidelines and monitor closely on the CPI data in order to decide on the market directions as well as the FOMC’s interest rate decision moving forward. Also, the development of China’s aggressive drills near Taiwan, may pose downside risk to the stock markets.

Local sales recovery will be anchored by the improvement in economic activities towards the year-end festive seasons. At the same time, SLP remains active in the adoption of automation and digitalisation process in bid tackle the shortage of workers issue and improve production efficiency. Nevertheless, the challenging operations scenario may keep margins in check in subsequent quarters ahead.

Guan Chong Bhd (GCB) engaged in the manufacturing and trading of cocoa-derived food ingredients and cocoa related products. To-date, GCB’s total capacity stands at 270,000MT per annum, ranking the group as the fourth largest cocoa grinder in the world.

The FBM KLCI retreated mildly on the back of elevated tension between China and Taiwan. Also, with the market expecting a more hawkish tone from the FOMC meeting going forward after the better-than-expected jobs data on Friday, we expect the near-term volatility to persist. However, we believe the downside risk might be limited if the economy is on the recovery tone; short term upward move could be seen. Similarly, on the local front, we are heading into the August reporting month, investors may position themselves ahead of the period within sectors with higher earnings certainty.

Major semiconductor players are expected to ramp up their expansion plans to meet the sturdy demand, particularly within the cloud computing, data servers, sensors, and automated solutions business segments. This bodes well for KGB as a proxy to ride along the expansion of wafer fabrication plants.

The FBM KLCI bounced higher in tandem with most of the regional peers, underpinned by buying momentum in selected utilities, telecommunication and banking heavyweights. We believe sentiment is likely to stay positive bias for the session as investors have shrugged off the US-China geopolitical risks to focus on the upcoming earnings season.

We note that average tin prices in 2Q22 fell to USD36,828.08/MT (-15.2% QoQ) and has further deteriorated in recent months. We reckon that concerns over the global recession will continue to dampen the demand outlook for industrial metals, which we have now revised our tin price assumption lower to USD30,000 and USD25,000 (from USD35,000 and USD30,000) for 2022f and 2023f respectively.

The FBM KLCI took another dive amid continuous profit-taking activities as investors digested the strong gains in the previous four sessions. Given the market treated Nancy Pelosi’s visit to Taiwan as non event, we believe the sentiment will recover along with the regional peers following the sharp gains in the US triggered by robust economic data and stronger corporate earnings.