Bull Market Back Backed by Foreign Funds?

On 1st March, Saudi Aramco signed an agreement with Malaysia's national oil company, PETRONAS. The deal will allow Aramco's to have equal ownership in selected ventures and assets of the RAPID project within the Pengerang Integrated Complex (PIC)[1]. The RAPID project includes a refinery with the capacity to churn out 300,000 barrels of oil a day, a cracker plant and a petrochemical complex with an annual production capacity of 7.7 million metric tons. The refinery begins operation in 2019.

Saudi Aramco signed an agreement with PETRONAS on participation in RAPID

The partnership marks the beginning of a strategic relationship providing RAPID with high-impact strengths from both Saudi Aramco and Petronas. “On the occasion of the historic state visit to Malaysia by King Salman, Saudi Aramco is proud to be entering into a deeper partnership with our world class partner Petronas via the RAPID project,” Aramco’s president Nasser said. “Together with Malaysia, the Southeast Asia region offers tremendous growth opportunities and today’s agreement further strengthens Saudi Aramco’s position as the leading supplier of petroleum feedstock to Malaysia and Southeast Asia.”[1]

After since, our index had been quite bullish. Notice of the support at 1690.93? The chart bounced off the support on the 1 March 2017 and after that, it continued its uptrend. We can also draw an uptrend channel after the V-shape rebound in the beginning of 2017. To add some spice to that, SMA50 had crossed over SMA200, which confirms that the bull is back~

FBMKLCI Daily Chart

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Okay, why do i highlight this news? What am i relating this to? I am not sure whether this is something worth taking note. I realize the total volume and the total turnover had been quite active since then. The volume will be more than 3 billion shares everyday and the turnover will be more than RM2 Bil, which above the usual RM1.2 Bil. Maybe it is just normal, therefore, i need to gather more data on this. But my point is if the volume and turnover is becoming higher and higher after the Saudi Aramco and PETRONAS agreement, i am quite sure that the confidence of foreign funds towards Malaysia equity market had increased.

Let me support it with these data, the data of market particitipation[2].

Market Participation

Since 1 March to 8 March, foreign funds had been actively buying into our Malaysian shares. RM393.9M had been flowed into our Malaysian market (excluding the data of February). Our local institutions and local retailers (you and me =P) had been in a net selling mode and profit taking after the quarter results being announced. 

Still not convinced? Alright, imagine if you are a Foreign  Fund Manager... What sectors will you buy in? Definitely will be the banking stocks, right? Banks seldom go bankrupt. Despite the forecast of loan growth to be low at 4.7%, but still, the banking sector will be the steadiest among other sectors[3]. Let us look at the FINANCE chart.

FINANCE Daily Chart

Similar with the FBMKLCI, after the V-shape rebound at the end of December, it had been in an uptrend mode, breaking through the resistance of 14,981.25 and now supported by it.

So does it signifies that the bull market is back? Since the signing of PETRONAS and Saudi Aramco agreement, more volumes are coming in, more foreign funds are coming in, because they felt more confident of our Malaysian market, thus boosting up the local consensus. From the chart pattern, our FBMKLCI is in a bullish mode with an uptrend chart. Short term, it is bullish, however, if the Foreign Funds continue to inflow, then it will be mid term. If the corporate earnings continue to grow, then it will be a long term bullish. Therefore, there are a few datas we need to monitor, market participation, GDP result, loan growth and also the quarter results from our blue chips bosses~ 

As of now, i think we should ride the wind, ride on the bull~

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Let's Ride the Wind and Gainvest

Gainvestor 10sai

9 March 2017

6.25am

Sources:

[1]: http://www.arabnews.com/node/1061356/business-economy
[2]: http://www.malaysiastock.biz/Market-Statistic.aspx
[3]: http://www.thestar.com.my/business/business-news/2017/02/02/slower-growth-seen-for-malaysian-banks/