HLBank Research Highlights
Traders Brief - Heading towards stiff 1674-1689 zones -
Bursa Malaysia recap
KLCI rose 15 pts to record its 2nd straight gain
- After tumbling 5.8% last week, the MSCI Asia Pacific Index extended its gains for a 2nd day as the index rose 1% to 118.7 amid a 3.3% rally in SHCOMP. In China, the nation’s banks doled out a record amount of loans in January while its Premier Li Keqiang assured that the nation will take decisive actions if needed amid recent global economic headwinds and falling equity markets. Sentiment was also lifted by ECB President Mario Draghi’s pledge to act s hould financial turmoil threaten price stability as well as higher oil prices on the back of news that ministers from Saudi Arabia, Russia, Qatar and Venezuela is holding meeting in Doha yesterday of a possible global output deal.
- Tracking strong regional markets, KLCI jumped 15 pts or 0.9% to 1665.intra-day high of 1648.7 and a low of 1638.5.
Wall St recap
Dow surged 222 pts to extend its 2nd consecutive gain
- After falling 1.4% or 231 pts wow, the Dow extended its relief rally with a 1.4% gain overnight after the Pres idents ’ Day holiday, playing catch up with the rally in Europe and Asia markets, spurred by a strong 3.3% rally in SHCOMP. Sentiment was also helped by Mario Draghi hinting potential easing in March.
- Meanwhile, ahead of another crucial meeting between two key producers Iraq and Iran in Tehran today, WTI oil price retreated 0.8% on profit taking overnight to US$29.1/barrel amid bets that a pledge by the world’s two larges t oil producers , Russia and Saudi Arabia to freeze output (but not cut production) will not succeed in tackling the global surplus.
KLCIoutlook
Heading towards stiff 1674-1689 zones
- Today, Bursa Malaysia is expected to stage another followthrough rebound amid rallies in overnight US and European markets coupled with stabilizing SHCOMP. However, profittaking interest should increase on further near-term gains towards our envisaged 1674 (23.6% FR) and 1687 (200-d SMA) zones given the choppy trading environment amid external market uncertainties, weighed down by still choppy oil prices and potential retreat in USDMYR.
- Near term supports are 1650 (50-d SMA), 1642 (38.2% FR) and 1622 (15 Dec low). Technically, KLCI is still likely to trap in a triangle consolidation unless staging a decisive rebound above the 200-d SMA resistance levels.
- Stock on radar (FIG3): We recommend Momentum idea, KOMARK (manufacturing of self-adhesive labels and stickers and trading of related products) as share prices are likely to head towards RM0.68-0.745 in the medium to long term, given the bottoming up indicators. Key supports are RM0.615-0.625. Cut loss at RM0.595.
Source: Hong Leong Investment Bank Research - 17 Feb 2016
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