The market appears to have found a temporary bottom at current levels between 1660 and 1670. All the momentum indicators (RSI & Stochastic) shows that the market is oversold and should recover.
After four weeks of declines on talks of additional and new taxes, we have finally reached the first of three events that will determine in which direction the market will go. The Budget will be announced this Friday, After the announcement of the budget, good or bad, we should see a relief rally. The Finance minster will set out clearly the direction of the Malaysian economy and the policies and areas of priorities. All the market need to see is clarity and certainty, and a relief rally will happen. How far it will rebound is another matter, but I don’t see it topping 1720.
As far as our industry is concerned, I don’t see Capital Gains Tax being implemented. By all means raise the stamp duty on contracts, remove the RM200 cap, as big investors can afford to pay higher duties. After all,l these big investors often only pay 0.08 % in brokerage charges.
The second event is the up coming US mid term elections on 6th November. All 435 House of Representative seats will be up for re-election. 35 out of the 100 Senate seats will also be up for re-election. As Mark Mobius says, a win by the Democrats will cause the US market to fall further.
Lastly, the never ending trade war between the US and China will rear its ugly head again in early December after the G20 meeting in Argentina if no agreement is reached. It is very unfair for Trump to bully China and accuse it of stealing it’s intellectual property. Chinese students studying in top US universities are only acquiring knowledge and if they choose to return to China and use and further develop what they have been taught, it is not stealing.
Sumber:Affinhwang Capital Remisier Management System 2018
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