On October 7, the market was shocked by the surprising news of the termination of MRT2 underground job. While the latest cost-saving effort is similar to the reduction in the scope of work and the contract value for LRT3, which was announced in July, the timing of its announcement less than 1 month before the reading of the 2019 Budget on November 2 (here) gave away the likelihood that this budget will not come with goodies for Malaysians. This will be a very tough budget. To underline the difficulty, the PM has even announced that the Government may have to impose new taxes or sell off some assets to pay down the debts (here).
These announcements will cause much anxiety in the market, and if left unguided, it will lead to market selldown. The chart for FBMKLCI shows that the index is now precariously resting on the "horizontal line" at 1770. A breakdown of this support will send the index to the May low of 1710 or even to re-test the June low of 1660.
Chart: FBMKLCI's daily chart as at Oct 9, 2018 (Source: Malaysiastock.biz)
Given the challenging market ahead, investors and traders must re-look their portfolio and reduce their position to cushion against the storm ahead. Good luck!
No comments:
Post a Comment