Market review

• Asian stock markets were largely higher amid a recovery in crude oil price after EIA reported a drawdown in inventories by 869,000 barrels last week to 256.2 mln barrels. The Shanghai Composite Index and Hang Seng Index advanced 0.53% and 0.17%. Meanwhile, Nikkei 225 fell 0.53% as traders cautious ahead of Trump-Abe meeting.

• Despite better sentiments on the regional indices, trading activities on the local bourse were fairly muted among the index heavyweights as the FBM KLCI was wavering between a five-point range throughout the whole session before closing marginally lower at 1,688.50 pts (-0.02%) on Wednesday. However, most of the trading interest was noted among the small caps and lower liners, which the FBM Small Cap index rallied towards near the 16,000 level. Market breadth was positive with 471 advancers, 389 decliners and 369 traded unchanged.

• US stock market cheered positively after Donald trump commented that he will announced a potential major tax reforms in the next few weeks. Also, initial jobless claims unexpectedly fell, suggesting a solid labour market and supported the dollar index higher. The Dow surged 0.64% to 20,172.40 pts.

Technical view

Sideways mode, but positive technical indicators

• The MACD Indicator is still positive as the MACD Histogram extended another green bar, while the RSI is hovering above 50. Both indicators are suggesting that the key index is likely to trend higher over the near term. Immediate support will be located around 1,680, while the resistance will be envisaged around 1,700.

Market outlook

• With the investors anticipating more positive policies to be made by Donald Trump, we may expect positive sentiments to persist over the near term. Meanwhile, buying interest may spillover to Bursa Malaysia and the FBM KLCI is likely to trend higher after the recent two-day consolidation near the 1,690 level.

• Trading Buy - CENTURY. CJ Korea Express emerged as Century’s shareholders, tapping into Century’s distribution network and could bring it to the next level with the transfer of technical knowledge. As the price managed to rebound above the SMA200 over the past two months, suggesting that the buying support remains intact. We may anticipate a breakout above the immediate resistance of RM0.90, targeting the RM0.955 and RM1.04 levels. Support will be located around RM0.875 and RM0.86. Meanwhile, cut loss will be set at RM0.84

Source: Hong Leong Investment Bank Research - 10 Feb 2017