Market review

• Investors digested Trump’s speech on a positive note and most of the Asian key indices advanced for the day. The Shanghai Composite Index and Hang Seng Index rose 0.15% each, while the Nikkei 225 rocketed by 1.44%.

• After ended lower for four consecutive days, the FBM KLCI managed to rebound higher by 0.23% to 1,697.69 pts. However, it still faced resistance along the 1,700 level as profit taking activities emerged near that psychological level. Market breadth was positive, helped by technical rebound among small caps stocks, advancers led decliners by a ratio of 546-to-360 stocks.

• US equities cheered on a stronger note after Trump's speech as investors focused on the positive tone of his message instead of the details in the economic plans. The Dow soared 1.46%, while S&P500 rocketed 1.37% led by banking stocks.

Technical view

FBM KLCI rebounded but faced resistance along 1,700

• The FBM KLCI was supported along the 1,691 level and rebounded with the emergence of buying support towards the 1,700 level. The MACD Histogram has turned green. Also, the RSI and Stochastics oscillator hooked up to 52 and 60 respectively. The KLCI’s resistance will be located around 1,700, followed by 1,730. Meanwhile, support will be pegged around 1,680.

Market outlook

• Without any negative surprises in Trump’s speech, we expect short term buying interest to prevail. As the Dow is on an uptrend intact formation, buying momentum may sustain over the near term with the trailing support anchored around 20,776. Meanwhile, the FBM KLCI is likely to follow suit on a strong buying tone and the key index may surpass 1,700 to revisit 1,730.

• Trading buy – RANHILL. Ranhill highlighted its plan to expand its power business to the SEA region to increase its revenue contribution to the group to 50% from the current 30%. The cumulative dividend payments make Ranhill an attractive yield play with 9.3% dividend yield (based on total dividend of 7.8 sen at current market price of RM0.84). We expect buying interest could pick up over the near term towards the target of RM0.875, RM0.92 and RM0.975 levels. Meanwhile, support will be located around RM0.815-0.825. Stop loss will be set around RM0.80

Source: Hong Leong Investment Bank Research - 2 Mar 2017