Market Review

• Following the first round of French elections, which Emmanuel Macron (23.8%) led Le Pen (21.5%) eased of the “Frexit” concerns for the time being; Asian stock markets ended mostly higher with the Nikkei 225 advancing 1.37%, while Hang Seng Index added 0.41%. However, Shanghai Composite Index slumped 1.37% as regulators stepped in to increasingly clamp down on shadow banking and speculative trading.

• On the local bourse, the FBM KLCI ended strongly above the 1,746 level (weekly SMA200) at 1,756.05 pts (1.45% wow) last Friday led by banking stocks such as Maybank, Ambank and CIMB. Market volumes stood at 3.12b, worth RM2.65b. Also, market breadth was positive with 588 gainers, 320 losers, while 386 traded unchanged.

• As French elections cleared up the air with pro-EU Emmanuel Macron won the first round, investors turned bullish after making defensive trades prior to the French elections; Wall Street gapped up by 1.05% at 20,763.89 pts amid a relief rally.

Technical View

Bullish candle on the weekly chart with a breakout above 1,746

• The weekly MACD Histogram has turned green, while the daily MACD indicator has issued a “Buy” signal. Meanwhile, the daily RSI trended above 50 following the crossing above 50 last week. Given the setup on the technical indicators, we might anticipate a retest of 1,760, with the next resistance located around 1,780. Support will be pegged around 1,740.

Market Outlook

• Investors continue to gear up after part of the uncertain EU factors being taken out for the time being, we expect buying interest to persist over the near term. Also, investors may stay bullish as they might focus the tax reform plans that could be unveiled soon after comments from U.S. treasury Secretary resurfaced last week.

• However, should there be any geopolitical tension heightened over this week, it may cause market wariness and the FBM KLCI may pullback towards 1,740.

• Trading Buy-PTRANS. We believe AmanJaya Terminal in Ipoh stands to dominate due to its monopolistic business nature and the high barriers of entry (high land costs and construction costs) as it is the only gazetted bus terminal in Ipoh. Meanwhile, the weak RM, Visit Perak Year 2017, the opening of Animation Theme Park by 2H17 (about 5km from Aman Jaya Terminal) and SEA Games should provide strong FY17 earnings growth catalysts while FY18-19 impetus should derive from the operation of Kampar terminal.

Source: Hong Leong Investment Bank Research - 25 Apr 2017