Market Review

• Following the news that President Trump accepted an invitation to meet with North Korean leader Kim Jong Un, Asian stock markets gained momentum and ended higher. The Nikkei 225 rose 0.47%, while Shanghai Composite Index and Hang Seng Index advanced 1.08% and 1.11%, respectively.

• Stocks on Bursa Malaysia were slightly positive with the worries waned on US import tariffs. The FBM KLCI managed to close above 1,840 as buying support were noted on heavyweights such as Nestle and YTL. Also, on the broader market, gainers were leading the losers. Overall market volumes stood at 2.25bn, worth 2.02bn. Meanwhile, selected export-oriented stocks under the gloves (Supermax and Kossan) and semiconductor sectors (Inari and Unisem) were focused.

• US equities rallied higher as Bureau of Labor Statistics released the jobs data and US economy added 313k job in February. Nasdaq jumped 1.79% towards the all-time high and the Dow added 1.77%. Meanwhile, the fear index, VIX fell to 14.62 since early February spike.

Technical View

Recovering technicals, KLCI likely to revisit 1,860

• After a series of downward candles on FBM KLCI, the key index managed to recover above 1,840 late last week. Also, the MACD Histogram has turned green, indicating that the momentum is recovering. We believe that the key index could revisit the resistance along 1,860, while the support will be anchored around 1,830-1,840.

Market Outlook

• In the US, we think Wall Street could advance higher amid the easing concerns on the import tariffs after Trump signed it with Mexico and Canada being exempted. The next major event to be focused will be on the FOMC meeting and traders will be looking forward to the interest rates outlook for 2018.

• Meanwhile, following the bullish tone on Wall Street, we think stocks on the local front may extend the buying support after stabilizing last week near the 1,840 level. We anticipate that traders may focus on oil and gas sector following the rebound in crude oil.

• Trading Buy – SUNWAY. HLIB believes Sunway (12.8x FY12/18 P/E) should be rerated and trade closer to its peers such as IJM (15.4x FY3/19) and Gamuda (15.4x FY7/18) given its diversified income stream and declassification from property sector (now Trading & Services), coupled with its integrated real estate business model sector (potential spin-off to unlock values). A successful breakout above RM1.61 will lift prices higher towards RM1.66-1.82 zones, while key supports fall on RM1.49-1.56. Cut loss at RM1.48.

Source: Hong Leong Investment Bank Research - 12 Mar 2018