Market review

• Asian regional benchmark indices traded on a mixed note after China reported weaker-than-expected export data, which declined 6.1% yoy for the month of December; the Shanghai Composite Index fell 0.21% (-1.32% wow), while Hang Seng Index gained 0.47% (+1.93% wow). Meanwhile, Nikkei 225 rebounded 0.80% (-0.86% wow) as USD strengthened against yen.

• Meanwhile, share prices on Bursa Malaysia were softer as profit taking activities emerged after the FBM KLCI was deemed to be overbought around the 1,680 level; the key index fell 0.31% to 1,672.50 pts (-0.18% or -2.99 pts wow), snapping three days winning streak. Market breadth turned negative with losers outnumbered gainers by a ratio of 464-to-327.

• Despite the better-than-expected US retail sales and PPI index, US equities were mixed with the Dow falling 5.27 pts to 19,885.73 pts (wow), but the S&P 500 managed to gain 4.20 pts to 2,274.64 pts (wow) amid steady earnings from banking stocks.

Technical view

Weekly MACD Line below zero, but weekly RSI above 50

• The daily MACD Histogram extended another red bar, indicating exhaustion of the short term rally and momentum is weakening. Both the daily RSI and Stochastics oscillator continue to stay overbought.

Market outlook

• On Wall Street, trend is likely to remain rangebound as Trump's news conference was unexciting to lead the markets higher. Also, Dollar index might be undergoing a retracement phase, which may in turn boost the commodities such as crude oil and gold to a stronger position.

• Meanwhile, based on the recent strong rebound from the 1,615 level two weeks back, we may expect further consolidation on the back of extended profit taking activities as the FBM KLCI has hit the resistance around the 1,680-1,690 levels. Nevertheless, trading interest should be seen within O&G sector if crude oil can rebound higher towards US$60 per barrel mark.

• Trading Buy-TNLOGIS. We like the stock due to its resilient earnings and the potential valuation rerating upon its REIT listing. It is ripe for further rebound following the formation of Tweezers bottoms and positive downtrend line breakout last Friday. A decisive breakout above RM1.65 will spur prices higher towards RM1.76-RM1.84 levels. Key supports are situated near RM1.51-RM1.54. Cut loss at RM1.49

Source: Hong Leong Investment Bank Research - 16 Jan 2017