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Sunday, 27 May 2018

Funds Flow Analysis of Malaysia Stock Market (KLCI/KLSE): 27 May 2018, Sunday, 4.07pm Singapore Time

Funds Flow Analysis of Malaysia Stock Market (KLCI): 
27 May 2018, Sunday, 4.07pm Singapore Time
(Click on In-Depth Funds Flow Analysis Chart above to Expand)

Attached above is the Funds Flow of Malaysia Stock Market (FTSE Bursa KLCI in KLSE). In 1H-2016, Malaysia markets received large inflows in funds flow tide. This set up the Confidence Pivot (Stage 1a) in the realm of Funds Flow as a benchmark for future confidence motion. Notice in end-2016, when the large symmetrical triangle broke down, there was not much funds outflow from the market. This was where I had forewarned there will be no bear market at all for Malaysia and called for the buy on dips. Indeed in January 2017, per my reiterations to buy on dips, KLCI flipped from outflow to inflow, enacting all my fore-warnings, and negated the fake breakdown. This was then followed by confidence motion in 1H-2017 (which if passed the confidence test that was set up by previous max funds flow in 2016, the markets will super rally per my forewarnings). Indeed, markets did exactly per my directions too. 

In mid-2017, the markets in Malaysia once again set up another confidence pivot (stage 2a) using maximal funds flow inflow. This confidence pivot will have to be tested by a confidence motion in the future. Indeed, in May 2018, right after the PRU14 (Malaysian General Election 14 of Year 2018), the markets are doing this confidence motion now. Although year 2018 YTD (year to date) has currently seen a net funds flow outflow from the market, however this is just a short term outflow, and the market had already received large funds flow inflow for 2017 and 2016. In the 2016/2017 to 2018 long term, the market in Malaysia is actually persistently in a state of long term net funds flow inflow.

A real bearish market will have flipped into RED long term funds flow outflow strongly just before election and right after election. However, this did not happen for Malaysia. Instead, the funds flow trail is merely doing the confidence motion of Stage 2b which if passed like what it did in stage 1b will cause a superbly powerful rally just like stage 1b. These are all normal market actions. Funds flow trail in the market does not suggest inconfidence and there are still plenty of liquidity which wants to catch stocks on the dip. This is what I would term as a STRONG BULL MARKET that is still intact. I would judge that the current funds flow confidence motion will pass and not fail. Once passed, KLCI will rally again for all time new highs. 

Already, in my previous analysis, I had projected Malaysia Ringgit to have strong downside weakness in the short term, mid term and long term (refer to MYR inter-asset class link as attached below). Hence banks, commodities (soft commodities and hard commodities) and exports/export-oriented companies will be the strongest buy-up theme of play for Malaysia in the coming few years). These sectors will be most responsible for driving the KLCI up to all time new highs.

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