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.

The Kuala Lumpur Composite Index (KLCI) today improved by 0.9% to finish at 1,390 points. The market was boosted today by Bank Negara’s decision to cut interest rates by 50bps. Markets in the Asia region were generally up with exception of Nikkei 225 (-2.8%) and Stock Exchange of Thailand (-1.6%), recovering slightly from the bloodbath yesterday from tensions between United States and China. 

In yesterday’s update, I highlighted that current global and political conditions are ushering in a perfect storm for markets. I have listed them down below and think we might be turning a blind eye to them at this point.

1. Weak oil markets: Royal Dutch Shell has highlighted that there will be “major demand destruction that we don’t even know will come back”. A V-shaped recovery seems unlikely at this point with the sheer scale of demand destruction.
2. Weaker global demand and disruption in supply chains: While the rate of infections of Covid-19 has moderated, the easing of lockdowns in many countries will catalyze subsequent rounds of infections. Sentiments have improved, but investors are buying up the markets as if everything will return to normal in a matter of weeks. Obviously, that’s not the case as the World Economic Forum has estimated that the pandemic will last for 2 years and has warned of larger wave of Covid-19 infections the 2nd half of the year.
3. Tensions between United States and China: I do think tensions between these 2 countries will not abate in the coming months. One, Trump stands to gain with his anti-China rhetoric for the upcoming election. Two, the Chinese leadership has always adopted a “Us against the foreigners” diplomacy stance. 

For the Malaysian companies I am keeping track, most of them are still up. The best performing companies in terms of share price are Lotte Chemical Titan (53.4%), Padini (23.1%) and Bermaz Auto (17.2%). To date, the portfolio of companies I am keeping track on have improved to 8.4% return (4 May 2019: 6.3%). You can have a look at the companies I am keeping track on in the Google Excel sheet here or the table below.