HLBank Research Highlights
Traders Brief- Wild swings ahead amid external woes
Bursa Malaysia recap
KLCI ended flat after falling as much as 5.5 pts intraday
- Asian markets closed in red, triggered by catch-up losses in HANG SENG (-3.9% to 18545; -35.1% from 52-wk high) and KOSPI (-2.9% to 1862; -15% from 52-wk high) after a 3-day CNY break as well as extended correction in SENSEX (-3.4% to 22952; 23.6% from 52-wk high). Energy, commodities and banking related stocks took a heavy beating amid worries of sharp global economic slowdown and potential meltdown in SHCOMP when it reopens on 15 Feb (after a week-long CNY holiday).
- Against the choppy regional markets, Bursa Malaysia was relatively calm as the index only fell 0.5-pt, paring a 5.5-pt loss intraday.
Wall St recap
Dow tumbled 255 pts to record a cumulative 5-day loss of 756 pts
- Led by heavy losses in banking stocks, the Dow witnessed another roller-coaster ride overnight as the index tank as much as 412 pts to 15503 as investors grew skeptical that global central banks could rein in rampant volatility and soothe financial markets. The sharp fall was also contributed by a 6.75% plunge in Dow component, Boeing after reports surfaced that the Securities and Exchange Commission (SEC) has launched a probe into the aircraft manufacturer's accounting practices.
- However, the Dow bounced back to reduce the losses to only 255 pts at 15660 (-14.7% from 52-wk high) following news that the energy minister of the UAE saying OPEC members were ready to cooperate on a production cut. Meanwhile, safe-haven assets such as gold shot up 4.4% to US$1246/ounce (+17.5% YTD) and the US 10-year Treasury yield slipped 3bsp to 1.63% as investors fled riskier equities markets.
Wild swings ahead amid external woes
- Persistent external headwinds and the lack of domestic catalysts are likely to weigh on KLCI in the short term, with potential downside risks towards immediate support of 1622 (15 Dec low), 1615 (50% FR) and 1600 sychological levels. We remain cautiously optimistic that the 1600 psychological support will be well-defended in the short term despite external headwinds.
- Overall, KLCI is likely to trap in a triangle consolidation unless staging a decisive rebound above the 1674 (23.6% FR) and 1690 (200-d SMA) congested resistance zones.
- Closed position (FIG3) : Yesterday, we had closed our position on EG (with a 1.5% loss) amid expiry.
Source: Hong Leong Investment Bank Research - 12 Feb 2016
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