HLBank Research Highlights
Traders Brief - Profit taking to cap strong gains ahead of long Hari Raya holidays
KLCI ended +0.5-pt on last minute recovery after falling as much as 8.6 pts intraday
- Asian stock markets ended higher yesterday, driven by a 3rd consecutive rally in China’s SHCOMP (+2.4% to 3970 but - 23.3% from 52-week high), as Shanghai markets seemed to have bottom up from ongoing government's drastic measures to steam market rout. Sentiment was also boosted by news that an agreement had been reached between Greece and its European creditors.
- Despite positive regional markets, KLCI’s performance was rather muted as most investors took profits after recent gains ahead of the long Raya holidays (Bursa Malaysia will be closed on 2H 16 Jul and 17 July), lingering domestic uncertainties over political glitches and ongoing probes on 1MDB.
Dow rallies 217 pts to record its 3rd straight gain
- Dow surged 217 pts to 17977, thanks to a 3rd consecutive reliefrally in China Shanghai market and investors cheered anagreement between Greece and its European creditors finallyafter months of negotiations with a €86bn bailout funds (for aperiod of three years). To receive this 3rd bailout, Greece'sparliament must pass the new rules in areas such asprivatization, labor laws and pension reforms by Wednesday.
- As “Grexit” fear discounted, investors’ focus this week will bethe upcoming key results from JPMorgan Chase & Co, WellsFargo and Intel Corp coupled with Yellen’s semiannualtestimony to Congress on 15 & 16 Jul.
Profit taking to cap strong gains ahead of long Hari Raya holidays
- While positive development from Greece and stabilizing China markets should bode well for Bursa Malaysia to extend its rally from 1685 (9 July low), the local market is expected to trade sideways with most investors to keep at bay ahead of the extende d long weekend Raya holidays. Trading sentiment is also not expected to improve significantly with lingering political uncertainties and IMDB saga.
- Key supports are situated at 1700, 1685 (9 July low), 1671 (17 Dec 14 low) and 1660 (28 Aug 13 low).
- A swift recapture of 1718 (76.4% FR and 20-d SMA) and 1724 (30-d SMA) zones is vital for the local bourse to resume its uptrend from 1671. Further resistance levels are 1746 (61.8% FR), 1754 (50-d SMA) and 1769 (50% FR).
- Today’s recommendation (FIG4). We recommend INARI (Trading Idea) as the group is on a multi-year expansion driven by strong radio frequency (RF) demand on the back of rising 4G network adoption and exponential mobile data growth.
- The stock is poised to rewrite its 52-week high of RM3.58 and ripe for further relief rally amid the “Flag” breakout. Medium to long term upside targets are RM3.80-3.90 zones. Cut loss at RM3.16
Source: Hong Leong Investment Bank Research - 14 Jul 2015
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