Market Review

• Asian benchmark indices ended mostly higher amid recovery in crude oil prices and fading of unexpected news on the dismissal of U.S. FBI Director. The Nikkei 225 and Hang Seng Index rose 0.31% and 0.44% respectively, while Shanghai Composite Index ended higher by 0.29%

• On the local bourse, share prices were resilient with the FBM KLCI retested the 1,780 level on the intra-day basis and gained 0.50% to 1,775.39 pts at the end of the session. The market breadth was positive with 560 gainers, 376 decliners, while 404. Overall trading volumes stood at RM3.55b, worth RM3.48b.

• Most of the shares on Wall Street ended lower following the weaker-than-expected sales in Macy's and Kohl's, a possible indication of a slowdown in economy. The Dow traded to an intra-day low of 20,798.90 pts before settling at 20,933.36 pts (-0.11%). Meanwhile, Nasdaq declined 0.22% as Snap Inc plunged 21.45% amid weaker results.

Technical View

Still having resistance along 1,770-1,780

• The MACD Line is hovering above zero, but staying flattish. The RSI is trending positively above 50, while the Stochastics indicator is slightly overbought.

Market Outlook

• In the US, we opine that the rebound in energy related shares should be able to support trading sentiments over the near term. However, should there be any negative surprises in the upcoming April retail sales data that will be released later today, the Dow may pullback towards 20,500.

• While buying activities were noted yesterday on Bursa Malaysia, profit taking activities across the board could be seen, following the negative performance on the overnight Dow. Nevertheless, the steel sector is likely to be buoyant as investors are anticipating better-than expected quarterly results.

• Closed position: We closed our positon on AYS (8% gain) on 11 May.

• Trading Buy-EKOVEST. The stock tumbled from YTD high of RM1.52 (13 Mar) to a low of RM1.01 (4 May) before ending at RM1.23 yesterday following the shocking announcement that the sale of Bandar Malaysia to the IWCITY-China Railway Engineering Corp JV has lapsed on 3 May. We like the company for its i) huge outstanding construction order book; ii) potential unlocking of asset value through IPO for its expressways; iii) potential REITing of its shopping malls in long term; iv) its projects are not dependent on China FDI investment.

Source: Hong Leong Investment Bank Research - 12 May 2017