Weekly Market Update - 22 June 2015

Market Outlook

Equity Market Outlook

• It was a tough week for Malaysia as KLCI came under selling pressure at the start of the week after a negative report on AirAsia’s current finances by a foreign research house. Then on Thursday, Tenaga's share price fell sharply as a result of reports that it was buying Project 3B from 1MDB.
• For the week the KLCI fell 13 points or 0.7% to close at 1,722 points, near its low for the year.
• Negative sentiment from the Greek’s standoff with the European lenders continued to send ripples through the financial markets.
• Expect markets to be headline-news driven this week.

Fixed Income Outlook

• The highlight of the previous week was the Federal Open Market Committee (FOMC) meeting in which Janet Yellen’s statement was more dovish than expected. Post meeting, emerging market bonds rallied, including the Malaysian Government Securities (MGS) market. The whole MGS curve rallied between 6-11 basis points with the short end rallying the most. A large portion of this demand was seen from foreign investors. The 7-year benchmark benefited from this new demand, recording a strong bid-to-cover of 1.95x.
• The only local economic release last week was May’s inflation figure which came in at 2.1%, in line with expectations. The cost of food and utilities rose whilst transportation declined.

Source: Lipper for Investment Management, as at 19 June 2015

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