Market review

• Most of the Asian regional indices trended mixed after the long weekend break, accompanied by softer trading volumes; Shanghai Composite Index fell 0.24% to 3115.00 pts, while Nikkei 225 and Kospi Index rose marginally higher at 19,403.06 pts (+0.03%) and 2,042.17 pts (+0.22%) respectively. Meanwhile, MSCI Asia Pac declined 0.07 pts to 134.21 pts.

• On the local front, window dressing activities were noted among selected heavyweights such as HAPSENG (+52.0 sen) and SIME (+4.0 sen) on the FBM KLCI, which boosted the key index higher by 2.53pts to 1,619.68 pts. Nevertheless, market breadth was negative with decliners ahead of advancers by 375-to-333 stocks. Trading activities were muted as overall traded volumes stood at 1.09bn, which is below the three-month average volumes of 1.44bn.

• U.S. equities traded higher as the Dow retested the 20,000 level and NASDAQ marked a fresh all-time-high of 5,512.37 pts, helped by good sets of economic data such as consumer and housing data. Meanwhile, Brent crude oil surged above US$55 as traders were positive on the upcoming production cut move.

Technical view

KLCI still located below the immediate resistance of 1,620

• The daily MACD Line is hovering below the daily Signal Line, while the RSI is trending below the 50 level. Although the FBM KLCI rebounded amid window dressing activities, the key index’s upside is likely to be limited around the 1,630-1,640 level. Meanwhile, next support will be pegged around the 1,600-1,610 levels.

Market outlook

• Despite thinner market participation during the year-end period, we think that the Dow could still trend mildly higher within the 19,900-20,000 levels over the near term on the back of window dressing support.

• Meanwhile, with mild buying interest emerging after the long weekend, we could expect window dressing activities to be seen over the week – the KLCI might revisit the 1,630-1,640 levels. Also, as Brent crude oil steadied above the US$55 level, trading interest might pick up within the O&G sector.

• Trading Buy-Genting. Downside risks are limited owing to deeply oversold daily slow stochastic and undemanding valuation (14.6x FY17 P/E vs peers’ 25x). Key supports are RM7.55-7.66. After a brief sideways consolidation, we expect prices to stage a breakout above the downtrend line near RM7.87, followed by subsequent RM8.00-8.35 targets. Cut loss at RM7.53

Source: Hong Leong Investment Bank Research - 28 Dec 2016