November Inflation Report

'''' CPI growth eased marginally to 3.3% yoy in Nov (Oct: +3.4% yoy), in line with consensus estimates, on account of slower price increases in major segments, i.e. food, housing/utilities/fuels and transport.

'''' Mom, the CPI growth eased to 0.1%, the first moderation in five months, providing a relief that price pressure on the ground has begun to subside.

'''' However, services inflation increased further to 3.2% yoy (Oct: +3.1% yoy), the highest since April 2009, suggesting that inflationary pressure on the ground is still strong.

'''' We maintain our inflation forecast of 3.2% for 2011 and 3.0% for 2012. Risk to our forecast is on the upside given uncertainty on food supply chain and its impact on prices.

'''' We expect BNM to hold the OPR steady at 3.0% until end-2012 given the resilient economic growth and negative real return to savings.

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KLCI: Remain positive to retest 200-d SMA''

'''' Tracking broad profit taking activities by overnight Dow and Europe markets after the surge on 20 Dec, we may see similar pattern to take place on Bursa Malaysia (albeit likely be well-contained). Remain positive that KLCI will retest upside targets at upper Bollinger band (1497) and 200-d SMA at 1502 while supports fall on mid Bollinger band (1467) and 50-d SMA (1461).

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UOADEV: Upside bias as technicals are on the mend'' ''''

'''' Based on daily chart, we reckon that UOADEV is likely to find immediate supports near RM1.30 and lower Bollinger band near RM1.27. It appears that UOADEV is consolidating well above its triangle pattern and is ripe for further appreciation as technical indicators are gradually hooking upwards. The next upswing should push prices towards 30-d SMA (now at RM1.42), 50-d SMA (RM1.47) and upper Bollinger band (RM1.53). More significant resistance level is RM1.72 (61.8% FR). Cut loss below RM1.25.''