Market Review

• Tracking the gains from the overnight Wall Street, Asian stock markets continued to thread higher amid global economic optimism. Hang Seng Index and Shanghai Composite Index gained 0.28% and 0.54% respectively.

• The Malaysia’s stock market went into almost a berserk mode as the advancers outpaced the decliners with a ratio of 8-to-3 suggesting a bullish market and the FBM KLCI surpassed the 1,830 level. Overall market volumes shot up, nearing the 7bn shares traded for the session. Generally, GLCs and O&G sector were traded actively on the back of stronger ringgit (RM3.99/US$) and firmer crude oil trend (holding above US$67).

• Despite S&P500 (2,747.71 pts, +0.17%) marking another new high, Wall Street traded in a mixed tone with the Dow slid marginally by 0.05% to 25,283.00 pts ahead of few corporate earnings results as investors staying mildly cautious prior to the banking earnings later this week.

Technical View

Resistance still pegged around 1,835

• Still, the FBM KLCI managed to gain momentum above the previous resistance of 1,830. The MACD Line has trended positively above zero, but most of the momentum oscillators are in the overbought region. We think the sentiments may be turning slightly cautious after a steep rally recently. Support will be located around 1,800.

Market Outlook

• With the investors staying positive on the global outlook, we believe that the Dow may trend higher towards 26,000. However, as technical indicators are overbought and stretched valuations on most of the US equities, we think traders may take the opportunity to lock in profits over the near term – the Dow’s support will be set around 24,000.

• On the local bourse, although the ringgit has strengthened below RM4.00/US$ and the firmer crude oil price have supported the market sentiments last week, we think the overheated market may take some breather over the near term as the FBM KLCI has rallied more than 100 pts over past month. Hence, the retracement may take place with the immediate support anchored around 1,800.

• Trading Buy - MMODE. M-Mode Berhad (MMODE) is involved in development and distribution of digital contents such as mobile games, video contents, SMS/MMS and mobile payment platforms. In 2017, MMODE has diversified into property construction sector and managed to ink an agreement with Rexallent Construction Sdn Bhd to undertake the remaining construction of the H2O mixed development in Ara Damansara, for RM180m. We believe this could be a start of MMODE to undertake projects related to the construction segment. MMODE has been on a gradual uptrend, we anticipate it could poise for a breakout above RM0.41, targeting RM0.445-0.47. Support will be at RM0.385.

Source: Hong Leong Investment Bank Research - 9 Jan 2018