Bursa Malaysia recap

KLCI closed flat to end 18.7 pts lower wow

• Despite a rebound in energy related shares as oil prices rose amid speculation that OPEC members were ready to cooperate on a production cut, Asian markets remained in downward consolidation as the MSCI Asia Pac index tumbled 3% to 113 (-6.2% wow), triggered by another violent sell-off of 4.8% in NIKKEI 225 (-11.1% wow). Sentiment was also dampened by fears of potential selldown in SHCOMP when it reopens today following a week-long CNY holiday and deteriorating faith in the central banks and their ability to stabilize the ongoing financial malaise.
• Tracking the sluggish regional markets, KLCI ended flat in a volatile trade after fluctuating within a range of 10.2 pts between an intra-day high of 1648.7 and a low of 1638.5.

Wall St recap

Dow surged 313 pts but still ended 231 pts lower wow

• The Dow snapped a five-day losing streak last Friday and logged their largest daily gains so far this month (+2% or 313 pts to 15973), as battered bank and energy shares led a rebound at the end of a turbulent week. J.P. Morgan and Goldman Sachs Group were the two top performers on the Dow Jones Industrial Average, as financial shares found support after Deutsche Bank AG’s announcement that it would repurchase US$5.4bn of its senior unsecured debt. Sentiment was also boosted by a 12.3% rally in WTI prices amid speculation of production cuts by OPEC members and stronger-than-expected economic data of Jan retail sales.
• Wall St will be closed today due to the President's Day holiday.

KLCI outlook

High volatility is here to stay amid external woes and ongoing Feb reporting season

• Persistent external headwinds and the ongoing Feb reporting season 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 psychological levels. Nevertheless, we remain cautiously optimistic that the 1600 psychological support will be well-defended in the short term despite external headwinds.
• Technically, 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.
• Stock on radar (FIG3): We recommend Momentum idea, PLABS today (a leading specialists in manufacturing, distribution and trading of animal health and nutrition products). A decisive breach above RM0.265 is likely to spur prices higher towards RM0.28-0.315 levels. Key supports are RM0.235-0.245. Cut loss at RM0.225.

Source: Hong Leong Investment Bank Research - 15 Feb 2016