Axiata (HOLD)

Complicated and Challenging India

'''' Reuters reported that India's Supreme Court has ordered the government to revoke 122 telecoms licenses issued under a scandal tainted 2008 sale.

'''' Idea Cellular's (which Axiata has 19.7% stake) 13 licenses will be revoked.

'''' On the bright side, Idea may be allowed to continue operation for the next 4 months, until regulators come out with new market rules or new auctions are conducted.

'''' Financial impact: Idea claimed that the decision may reduce up to 4%

'''' Comments: This news will definitely have a negative impact Axiata's investment in India pending India government's decision going forward.

'''' The punishment maybe in the forms of auctioning the revoked licenses or penalty payment. We view the former option as the worst case scenario as other incumbent players may take part and elevate the cost of the scarce spectrum.

''

KLCI: To retest 1550 zones after the 1530 breakout

'''' Fresh excitement could also be in store for Asian equities following Fed's decision on 25 Jan to keep the fed rate at exceptionally low till late 2014, as investors will be tempted to leverage on the USD as a cheap source of funding to invest in overseas financial markets that offer potentially higher returns, particularly in Asia.

'''' With the index staging a strong breakout above 1531 (31 Dec 11 closing) and upper Bollinger band, a challenge of the 1550 zones is back on the radar. Immediate supports are 1519-1531 levels.

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CIMB: Technical rebound in the pipeline

'''' Currently, the momentum and trend indicators are grossly oversold and are showing signs of bottoming up. Hence, the stock could test higher ground over the next few sessions to RM7.04 (540-d SMA) and RM7.12 (middle Bollinger band). Nevertheless, a more bullish outlook would only appear if share price manages to close consistently above RM7.12. The next upside targets are RM7.40 (upper Bollinger band) and RM7.64 (200-d SMA) levels.

'''' Immediate supports are RM6.83 (lower Bollinger band), RM6.64 (24 Nov 11 low) and RM6.56. Cut loss below RM6.64 .