Market review

• Asian key indices were fairly strong prior to the Fed’s meeting. Kospi index gained nearly 1 percent after South Korea’s president was removed from office last Friday, while Nikkei 225 rose 0.15% as yen continued to weaken against the US Dollar. Meanwhile, Shanghai Composite and Hang Seng Index rose 0.76% and 1.11%.

• On the local bourse, despite the FBM KLCI ended on a higher note at 1,721.92 pts (+0.25%), market breadth turned negative for the day on the back of profit taking activities among lower liners. There were 473 gainers, 497 losers and 326 traded unchanged. Overall market volumes stood at 3.78bn, worth RM3.08bn.

• Despite banking stocks advancing amid potential interest rates hike by the Fed, Wall Street ended on a mixed note dragged by healthcare stocks. The Dow settled marginally lower at 20,881.48 pts (-0.10%).

Technical view

Rangebound mode around the 1,720-1,730 levels

• The daily MACD Line is still hovering above zero, while the MACD Histgoram has extended another red bar. Meanwhile, the RSI is hovering above 50 – indicating potential resumption of upward momentum. Resistance will be envisaged around the 1,730 level, while the support will be set along the 1,700 level.

Market outlook

• With investors focusing on the outcome of FOMC meeting, trades on the US stock markets are likely to trend sideways. Meanwhile, on the local front, shares on Bursa Malaysia may see limited upside as traders may be deploying selling-into-strength strategy prior to the important scheduled Fed meeting.

• Trading Buy-CRESBLD. The market may have irrationally mispriced CRESBLD as the stock is only trading at 0.42x P/BV, 61% below the sector and 12% below its 10-year average, supported by an attractive DY of 4.2% (peers: 1.4%) and strong orderbook. Following the bullish downtrend breakout, CRESBLD is poised to break immediate resistance of RM0.975 before advancing further towards RM1.01-1.15 upside targets. Key supports are RM0.88-0.905. Cut loss at RM0.87.

• Trading Buy-UEMS. The group proposed to dispose three pieces of land parcel in Canada and will increase UEMS’s EPS by circa 2 sen. Also, UEMS is likely to be one of the potential GLC-linked theme play over the near term after the recent IWCITY merger deal. UEMS experienced a symmetrical triangle formation breakout above RM1.20, we may expect follow-through buying interest over the near term, targeting RM1.35-RM1.42, followed by LT objective target of RM1.51. Support will be set around RM1.16-RM1.19, while cut loss at RM1.13

Source: Hong Leong Investment Bank Research - 14 Mar 2017