Malaysia Portfolio Investment Calls and Stock Market Update (3 Jun 2020)
Disclaimer: This research should be used purely for informational purposes and is my own personal opinion. I bear no responsibility to whatever investment decisions taken by anyone with regards to this research.
Market Performance: KLCI is up in line with other markets in the Asia region, possibly pushing the 1550 level this week.
The Kuala Lumpur Composite Index (KLCI) today advanced by 2.0% to end at 1539 points, pushing the market towards the next psychological level at 1550 points. All markets were up notably Singapore (+3.4%), Indonesia (+1.9%), Philippines (+3.7%), Germany (+3.7%), and Hong Kong (+1.4%).
Market Outlook: More positive as Eurozone economic data indicates improving sentiments.
Markets around the world continued to rally on the reopening of economies and the perception of the recovery from Covid-19. Economic data from the Eurozone today indicates that sentiments are improving, with the unemployment rate coming out stronger-than-expected at 7.3% compared to forecast of 8.2%. On the supply side, the Composite Purchasing Manager’s Index (for more information on PMI, click on the link here ) came in stronger-than-expected at 31.9 (Forecast: 30.5). The sense of optimism in the markets are now growing in spite of the fact that 2Q economic datas are expected to be the worse, possibly extending into 3Q. I believe we are getting complacent to the realities on the ground, with various organisations around the world confirming that the current recession will even be worse than the 2009 financial crisis. Regular lockdowns of economies will be the norm for everyone moving forward, as small clusters of infections have proven to spread faster and wider than we have anticipated. While oil prices have subsequently recovered from April’s disastrous rout, they are still low when compared to historical prices. Tensions between the United States and China is still expected to escalate even further.
Portfolio Performance: Portfolio returns increased, while still outperforming the KLCI index.
To date, the portfolio of companies I am keeping track on has improved to 15.3% return (2 Jun 2020: 13.2%), outperforming the KLCI index at 12.3%. This indicates an alpha of +3.0% for today (2 Jun 2020: +3.1%). (Note: Alpha is a measure of how much higher or lower the portfolio performs against the market. A positive alpha indicates that the portfolio outperforms the market and vice versa)
From a sectoral point of view, the manufacturing stocks in my portfolio continues to outperform the other sectors, registering 28.0% returns to date. This is followed by Banking (+14.5%), Retail (+14.1%), and Construction (+13.8%).
The higher returns today was supported mainly by daily returns from Alliance Bank (+7.8%), Affin Bank (+8.1%), CIMB (+4.4%) and Cahya Mata Sarawak (+4.3%). You can have a look at the companies I am keeping track on in the Google Excel sheet here or the table below.