Market review

• Tracking the negative overnight Wall Street performance, Asian stock markets trended mixed as investors took a sideline view as Trump’s inauguration took place; Kospi index and Hang Seng Index dropped 0.35% and 0.71% respectively, while Nikkei 225 added 0.34%. Meanwhile, Shanghai Index gained 0.69% after the Chinese economy grew by 6.8% yoy in 4Q16.

• Similarly, market sentiments were cautious amid the Donald Trump’s inauguration and the FBM KLCI trended sideways between the range of 1,664-1,668 throughout the day before ending marginally lower by 1.62 pts to 1,664.89 pts (wow). Market breadth was negative as decliners led advancers by a ratio of 4-to-3 stocks.

• Meanwhile, after five consecutive losses on the Dow, market sentiments reversed and the Dow managed to return into the positive zone after Donald Trump sworn in as the U.S. president. The key index advanced 0.48% to 19,827.25 pts (-0.29% wow). However, the Dollar index fell 0.41% to 100.74 pts.

Technical view

KLCI sideways around the 1,670 level

• The FBM KLCI took a breather around the 1,670 level as selling interest continued to take place. The MACD Histogram extended another red bar, while the weekly MACD Line is below zero. Also, the daily RSI trended lower over the past few trading days.

Market outlook

• As investors eyeing on “Trumponomics” to kick start the Donald Trump era, Wall Street is likely to remain positive. We anticipate that the US market will remain uptrend over the near term to retest the 20,000 and 2,300 levels on the Dow and S&P500 respectively.

• However, without significant market catalyst on the local front, profit taking activities are likely to extend over the near term. The FBM KLCI’s upside is likely to be capped around the 1,680-1,690 levels. If the key index violates below the 1,660 level, next support will be set around the 1,642 level. Nevertheless, traders might focus on the O&G sector amid the recovering crude oil prices, accompanied by some M&A news flow in the media.

• Trading buy – MKH. We opine that its property segment is likely to be on steady ground on the back of Kajang MRT, while plantation segment could benefit from the CPO short term uptrend. We may expect a breakout above RM3.00, targeting RM3.30-RM3.50, followed by another resistance of RM4.00. However, if the share price falls below RM2.84, cut loss will be initiated around RM2.70.

• Closed position: We cut loss on GPACKET (10.3% loss) last Friday after hitting our stop loss point at RM0.26.

Source: Hong Leong Investment Bank Research - 23 Jan 2017