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 continued its decline in line with other markets in the world

• The Kuala Lumpur Composite Index (KLCI) today continued its decline by 0.7% to settle at 1,546 points. However, the market did recover from its initial sell-off in the morning where it traded at 1,509 points at one point.

• All markets were down with the exception of Indonesia, as the steep sell-off in the United States market spilled over into the global markets.

• The United States market experienced a significant sell-off as investors realised the depth of the Covid-19 impact from the Federal Reserve’s projections for the economy. I have highlighted in the past that market investors were not taking the bad conditions on the ground seriously. It seems now that markets are reeling from the realities on the ground.

Source: WSJ

Market Outlook: Sentiments deteriorate as global markets reel from the steep sell-off of the US market, and bad economic data from the United Kingdom.

• Sentiments around the world are on declines in the past 2 days, as investors realised the extent and the depth of the Covid-19 impact.
  I highlighted yesterday that the FED projected economic projections that are near the levels of the Great Depression. Since then, markets were on continuous declines, with the United States, Germany and Singapore being the most affected. I have highlighted in the past that markets are now trading at irrational levels not connected to economic conditions on the ground, and I fear the market corrections might be steep next week.

• The United Kingdom economic activity contracted significantly, and was worse-than-expected in Apr 2020.
  Gross Domestic Product contracted by 24.5% and was below forecast expectations of -22.3% in April 2020. Both the construction output and manufacturing production came in worse-than-expected also. All of these economic data indicates that the earlier gains from the markets did not reflect the true conditions on the ground.

Source: Investing.com

Portfolio Performance: Portfolio returns moderated, but remained higher than KLCI returns

• To date, portfolio returns moderated to 13.5% return (11 Jun 2020: 14.8%), outperforming the KLCI index at 12.9%.
• This indicates an alpha of +0.6% for today (11 Jun 2020: +1.1%). (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 viewpoint, Automotive sector continues to outperform the other sectors in the portfolio, but all sectors were down today.
  I am considering positions in the KLCI for newer stocks, as I view this as an opportunity to accumulate stocks at a lower price. Since this was a broad-based slowdown across all sectors, it makes it a bit easier to accumulate blue chip stocks.

Note: You can have a look at the companies I am keeping track on in the Google Excel sheet here