Market Review

• Asian stock markets managed to surge higher on the back of steadier oil prices, coupled with firmer US dollar trend. The Nikkei 225 rose 0.72% as Japan’s core consumer price index up 0.9% yoy (vs. consensus of 0.8%). Meanwhile, Hang Seng Index and Shanghai Composite Index gained 0.97% and 0.63%, respectively.

• Following the positive performance on the regional indices, FBM KLCI managed to rebound further, adding 0.35% to 1,861.50 pts. Market breadth was positive with 560 advancers, 430 decliners, while 432 traded unchanged. Ace market stocks trended on an upbeat mode, while selected near-expiring warrants such as MAHSING-WB and BJASSET-WA were traded actively. Overall market volumes stood at 3.55bn, worth RM2.68bn.

• As traders look beyond the potential rate-hike factor, coupled with the retreat in Treasury yields, Wall Street gained strength and the Dow closed higher by 1.39%, while Nasdaq advanced 1.77%.

Technical View

Sideways consolidation with upward bias view

• The FBM KLCI experienced a flag formation breakout last Friday. The MACD Indicator is trending higher, while the RSI and Stochastics oscillators are hovering above 50. We believe the uptrend move could sustain towards the 1,870-1,880 levels over the near term. However, should the FBM KLCI violates below the 1,840 level, next support will be located around 1,820-1,830.

Market Outlook

• With the investors reassessing the possibility of higher interest rate environment, we think Wall Street may sustain its upward move. However, traders may focus on the FOMC meeting that will be held on 20-21 March, which may provide further guidance towards the economic activity and the interest rates situation.

• On the local front, with the positive performance on the overnight Wall Street, we think the KLCI may revisit 1,870- 1,880 on the back of firmer Brent oil (two-week high). Also, the on-going reporting season will be the main focus this week.

• Trading Buy – DESTINI. Destini excels in being one of the leading maintenance, repair and overhaul (MRO) service provider within the aviation, marine, land transport industries. Destini is viewed as a politically linked company as its single largest shareholder is Dato’ Rozabil Abdul Rahman (Group MD and UMNO Perlis treasurer) with a 25% stake. Meanwhile, Ministry of Finance has a 17% stake via its wholly owned subsidiary, Aroma Teraju. With the prices hovering above the SMA200 level after the symmetrical triangle breakout, we believe that Destini could be poised for another resistance breakout around RM0.64.

Source: Hong Leong Investment Bank Research - 26 Feb 2018