Market review

• Following the bullish tone on Wall Street as the Dow marked another all-time-high above the 20,000 level, Asian key regional indices surged towards one and half years high as investors remains positive after the Trump Abe meeting, coupled with potential economic policies by Donald Trump over the near term. The Nikkei 225 gained 0.41%, while Shanghai Composite Index and Hang Seng Index rose 0.63% and 0.58% respectively.

• Meanwhile, market sentiments on the local front were stable after the FBM KLCI traded above the 1,700 psychological level led by Tenaga (+22.0 sen), CIMB (+9.0 sen) and SIME (+8.0 sen). Market breadth was positive with gainers outpacing losers by 522-to-378 stocks. Overall market volumes stood at 2.48bn shares worth RM2.27bn.

• U.S. stock markets advanced for the fifth consecutive session amid further policy bet by Donald Trump and investors anticipating that “Trumponomics” would further support stocks. The Dow increased 0.7%, while the S&P500 and Nasdaq added 0.52% each respectively.

Technical view

KLCI may trend towards 1,730 over the near term amid sustained buying momentum

• The MACD Indicator expanded positively above zero, while the stochastics is suggesting an overbought position in FBM KLCI. Upside target will be pegged around 1,730. Meanwhile, support will be set at around 1,700.

Market outlook

• Market sentiments are likely to be fuelled by Trump policy bet over the near term as investors remain positive that the economic agenda will eventually boost the economy and stocks. The Dow is likely to trend higher over the near term with the trailing support located around 20,100.

• We expect trading tone on the local bourse will stay robust over the near term after the FBM KLCI marked its territory above 1,700. However, investors may look for selling-into-strength opportunities if the FBM KLCI trend towards the 1,720-1,730 levels. Nevertheless, FBM Small Cap index will be under traders’ radar after rallying above the 16,000 level.

Source: Hong Leong Investment Bank Research - 14 Feb 2017