Market Review

• Tracking the flattish tone on Wall Street, Asian key regional indices ended mixed despite stronger US dollar after posting strong retail sentiments in the US. The Nikkei 225 and Shanghai Composite Index slipped 0.12% and 0.14% respectively, while Hang Seng Index rose 0.86%.

• Stocks on the local front ended on a positive note with the FBM KLCI extending gains by 0.08%, while the FBM Small Cap Index and Technology Index has surged 0.83% and 1.05% respectively led by stocks such as VITROX and PENTA. Market breadth was positive with 529 gainers, 295 losers, while 367 traded unchanged.

• Wall Street ended on firmer note as the FOMC meeting minutes suggested that the Fed was still concern about the inflation figures, which has been below the Fed's target of 2% over the recent months and the Fed has a mixed views on the interest rates hike. The Dow and S&P500 traded higher by 0.12% and 0.14% respectively.

Technical View

KLCI still trending gradually higher towards 1,775-1,780

• The FBM KLCI trended higher over the past three trading days and the index is hovering above the SMA50. Also, the MACD Line is above zero, with the RSI trending upwards on a gradual tone. We may expect the FBM KLCI to trend mildly higher towards the resistance zone of 1,775-1,780. Meanwhile, support will be located around the 1,760 level.

Market Outlook

• With the disbanding of the manufacturing council, it may indicate a softer confidence towards Trump's economic agenda and investors may take a cautious stance to participate in the stock markets. We think the near term upside might be capped near the 22,200 level.

• Meanwhile, sentiments on Bursa Malaysia should remain positive amid re-emergence of buying support recently. Technology related stocks are likely to continue outperform the market and the sub-index may revisit the recent peak of 38, while KLCI is gradually trending towards the range of 1,775-1780.

• Trading Buy – EKOVEST. Ekovest is one of the main contractors and a concession holder for DUKE Highway, which offers healthy recurring cashflows and earnings to the group. Ekovest registered a PAT of RM92m in 9MFY17 results vs RM20m in 9MFY16. Current orderbook size is more than RM13bn, which may last them for another 4-5 years. The price has retraced from the peak of RM1.52 in March and is forming a good support above RM1.00. Ekovest may be targeting the resistance of RM1.17-1.21, with the support set around RM1.07-1.09. Cut loss at RM1.06.

Source: Hong Leong Investment Bank Research - 17 Aug 2017