Weekly Market Update - 23 October 2017

Market Outlook

Equity Market Outlook

• China 19^th Party Congress continue to emphasise on:
• Cutting excess and outdated capacities in steel and coal sector
• Prevent major systemic risk in property and financial markets through cooling measures and deleveraging in the banking system
• Alleviate poverty through higher spending in rural areas
• However, Hong Kong market reacted negatively given the concerns of liquidity tightening and rising profit taking sentiment after the rally before the congress meeting.
• Shino Abe’s landslide victory over the Japan election drives the positive sentiment for Japanese market, given the loosening monetary and pro-corporate policies to be carried on.
• Malaysia’s market was trading sideways given lack of fresh catalyst and market is anticipating more positive announcement for the upcoming 2018 Budget.
• We continue to be cautiously positive to the markets and selective in our portfolio, favour sectors like construction, building materials and consumers.

Fixed Income Outlook

• The US senate approved a USD4 trillion budget last week, clearing a hurdle to passing a tax reform this year. In the near term, we expect the announcement of the new Fed chair with the favourite being Jerome Powell, followed by John Taylor. US Treasuries yields rose last week on the approval of the tax budget and ahead of the Fed chair announcement.
• On the local front, inflation in September rose to 4.6%, rising from 3.7% in the previous month. Malaysia Government Securities (MGS) remained relatively stable due to low liquidity in the market, as a result of the Deepavali holiday. We expect potential weakness in MGS market in the near term due to external news flow. 

Source: Lipper for Investment Management, as at 20 October 2017. Past performance is not necessarily indicative of future performance. 

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