Market review

• Asian stock markets ended mixed for the week as investors were cautious ahead of the healthcare vote in the U.S., which was delayed and pulled out from the floor on Friday as the bill appeared to have a slim chance of passing through. On the weekly basis, the Nikkei 225 declined 1.33%, but Shanghai Composite Index and Hang Seng Index gained 0.99% and 0.20% respectively.

• Similarly, trading sentiments on the local front were slightly choppy as the FBM KLCI fluctuated between the negative and positive territory throughout the session and ended lower by 0.07% at 1,745.75 pts. Also, market breadth was negative with decliners outpacing advancers by a ratio of 590-to-312. Market volumes stood at 3.70bn, worth RM2.53bn.

• Following the surprise decision to withdraw the vote on President Trump’s healthcare bill, Wall Street reacted negatively and the Dow fell 0.29% to 20,596.72 pts (-1.52% wow) on Friday, marking the worst performance on the weekly basis since Donald Trump elected as president last November.

Technical view

FBM KLCI may pullback lower as inverted hammer formed on weekly chart

• The FBM KLCI has ended lower for the week after hitting an intra-week high near the 1,760 resistance level amid profit taking activities. Also, the weekly RSI and Stochastics oscillator are overbought. We opine that the key index may extend its consolidation towards the 1,720- 1,740 levels over the near term.

Market outlook

• With the violation below the sideways consolidation phase over the past two weeks, we expect further profit taking activities to prevail as investors may be focusing on Donald Trump’s economic plan such as corporate tax reform over the near term.

• Share prices on the local front might turn weaker following the worst weekly performance on Wall Street. Also, FBM Small Cap and ACE market indices may revisit the support of 16,840 and 5,600 respectively. Nevertheless, should Brent oil prices rebound further from US$50 support level, trading interest may emerge within O&G stocks.

• Closed positions. Last Friday, we took profit on 3A (11.5% gain) after hitting R2 upside target.

Source: Hong Leong Investment Bank Research - 27 Mar 2017