Market review

• Tracking the negative performance on the overnight Wall Street, Asian stock markets were splashed in the reds led by Nikkei 225 diving 2.13% amid stronger yen, while Shanghai Composite Index and Hang Seng Index slid 0.50% and 1.11% respectively.

• As expected, profit taking activities emerged within the local bourse and the FBM KLCI declined 0.36% to 1,748.30 pts. Also, selling pressure was noted among small caps and lower liners which contributed to a negative market breadth (605 decliners, 328 advancers and 344 traded unchanged). Overall market volumes dwindled 30.9% to 3.16bn shares.

• Following the sharp fall in the previous session, US stock markets trended sideways ahead of the healthcare bill vote, coupled with slower-than-expected home sales. The Dow ended marginally lower at 20,661.30 pts (-0.03%), but S&P500 and Nasdaq gained 0.19% and 0.48% respectively.

Technical view

FBM KLCI trended lower, but formed a hammer candle above 1,740

• Despite significant profit taking activities in the local bourse, mild buying interest pared down some losses and formed a hammer candle on the FBM KLCI. The MACD Histogram was shrinking, while the Stochastics oscillator stayed in the overbought region. FBM KLCI’s upside is envisaged at around 1,750.

Market outlook

• Despite some mild bargain hunting activities on Wall Street, we expect the technical rebound would be short lived and may eventually retest the immediate support of 20,500 as uncertainties on Donald Trump's policies surfaced recently. Meanwhile, sentiments on Bursa Malaysia might turn positive as traders are likely to look for opportunities within the fundamentally solid small cap and oversold stocks.

• Trading Buy - BIMB. BIMB offers investors exposure to Islamic finance, both banking and takaful industry. Given the nature of under-penetration for both industries in Malaysia, we are positive that BIMB is in the pole position to benefit from further proliferation of Islamic financial services. Despite the mild pullback, BIMB may resume its uptrend after forming a long-legged Doji pattern in its latest session with share prices trending above the support trend line. A breakout above RM4.51, in our view, could form a new upswing towards RM4.68 before climbing higher towards our LT objective at RM4.90. On the flip side, key supports are RM4.25-4.33. Cut loss at RM4.22

Source: Hong Leong Investment Bank Research - 23 Mar 2017