Market review

• Key regional indices such as Shanghai Composite Index and Hang Seng Index declined 0.8% and 0.5% as investors stayed cautious amid the rising geopolitical tension in Germany and Turkey. However, Nikkei 225 added 0.5% after BOJ kept the interest rates unchanged and Governor Haruhiko Kuroda is optimistic on the outlook of Japanese economy. Nevertheless, MXAP Asia Pac slipped 0.59 pts or 0.43% to 135.32 pts.

• Shares on the local bourse trended mixed accompanied by softer overall market volumes at 1.29bn vs. the 3- month average volumes of 1.49bn. The FBM KLCI was fluctuating between the positive and negative territories throughout the trading session before closing marginally higher by 0.22 pts at 1,634.52 pts.

• After stalling sideways over the past five trading days, U.S. equities regained momentum with the Dow marking 17th record close since Donald Trump was elected as U.S. President in November. Also, dollar index added 0.15%, while Brent crude oil rose 0.78%.

Technical View

Short term indicators are still weak

• Still, the daily MACD Line is hovering below the zero level, with the MACD Histogram extended another red bar. Meanwhile, both the oscillators (RSI and Stochastic) are suggesting that the momentum is weak. If the KLCI breaches below the 1,630 level, further downside is located around the 1,620 level.

Market outlook

• With the resumption of buying interest towards the 20,000 psychological level, investors were seen more optimistic on "Trumponomics" and future outlook of the U.S. economy. Hence, we think that the Dow should be able to maintain its trend above the 10-d SMA level during the year-end window dressing period. Meanwhile, positive sentiments abroad may spill to shares on Bursa Malaysia; the FBM KLCI could be due for a technical rebound today towards the 1,644 level. Also, traders may lookout for opportunities under the export-oriented and O&G related stocks for short term trading.

• Closed position (FIG 4): We had closed our positions on AIRASIA (6.6% loss) after hitting cut loss levels. We also took profit on DNEX (6.3% gain) after hitting R1 upside target.

Source: Hong Leong Investment Bank Research - 21 Dec 2016