Market Review

• The expected drop in KLCI yesterday only lasted for the first 2 trading hours in the morning session before it ended Wednesday marginally higher by 1.85 pts or 0.11% to 1627.96 despite continued jitters over BREXIT & the outcome of the Fed meeting and correction in oil & Wall Street.

• On the external front, most Asian markets also reversed morning losses as Chinese markets led gains for major Asian equities, shrugging off a decision by stock index provider MSCI on Tuesday to delay inclusion of mainlandtraded Chinese A shares in its key emerging market index.

• On the other hands, Dow declined for a fi fth session in a row overnight, marking its longest losing streak since the market’s low in February. Dow was down 34.65 pts or 0.20% to 17640.17, despite the F ed’s decision to postpone rate hike, as investors remained focused on BREXIT referendum on 23 June.

Technical Insights

• In the midst of correction

• Based on weekly chart, the trend of KLCI continues to undergo a correction phase (see FIG4). It formed an inverted Hammer last week, suggesting that any rally would be capped. The local benchmark index is likely to find strong supports near 1614.14 and the psychological level of 1600 before it could hit 1580-1575 territories.

• Based on daily chart, Hammer candlestick on 14 June, coupled with y esterday’s white candlestick, may point to a technical rebound to fill the recent gap of 1641. However, any technical rebound will capped near 1650 as the trend of KLCI remains down and negative.

Market Strategy

• Despite Fed’s decision to postpone interest rate hike boosting market sentiment, investors stay cautious over the uncertainty surrounding the looming BREXIT referendum on 23 June as well as correction in oil prices.

• Technical speaking, the local benchmark key index may see a technical rebound to fill the recent gap of 1641 but any rebounds will be capped as the trend of KLCI remains down and negative.

Source: Hong Leong Investment Bank Research - 16 Jun 2016