Despite the recent encouraging foreign funds inflow, short-term selling pressure continued to limit the benchmark index upside, capping it at 1,882 with support levels at 1,858-1,865. As the earnings results releases thus far were generally satisfactory, we do not expect any surprises in this final week of reporting season. After CIMB’s disappointing results last week, MAYBANK will be the focus when its 1Q14 result is released this Thursday. In all, we have a mixed weekly performance for our model portfolios with DIVIDEND YIELD Portfolio underperforming the FBMKLCI while THEMATIC and GROWTH Portfolios continued to outshine. Nonetheless, all our three portfolios outpaced the key index by 59-320bps with THEMATIC Portfolio being the top performer.

To trade sideway with uptrend bias this week. As the key index failed to hold on to the previous week’s high last Friday, the local market is likely to consolidate further this week to digest the short-term selling pressure with support level at 1,858-1,865. Technically, the FBMKLCI is still on the uptrend and is likely to fill the 1,867-1,873 gap before testing the immediate resistance level of 1,882. With little fresh catalyst, the barometer index is unlikely to push through the key 1,900 psychological level. Again, the focus this week will remain on the corporate earnings as we are in the final week of reporting season. We are expecting more than 30 results from our core coverage while companies focus under our model portfolios are RHBCAP which earnings will be released today, IJM and PESTECH tomorrow and MAYBANK on Thursday. Thus far, the earnings releases were generally satisfactory while last week’s key disappointment came from CIMB which partly attributed to seasonality and the equity market’s soft start for the year.

Profit-taking on prevailing weak sentiment. The market started the week with a record-high last Monday, but weak sentiment dragged the market down for four consecutive days with the key index dipping to the weekly low last Friday. On a positive note, foreigners resumed their net buying mode with a total net inflow of RM282m last Friday. This marks the 17th straight days of net buying, the longest net buying streak, YTD. At last Friday’s closing bell, the FBMKLCI closed 14.12% or 0.75% WoW lower to 1,869.22. PETDAG (-12.57%) topped the loser list, after it reported disappointing results two weeks ago coupled with gloomy prospect, followed by IOICORP (-4.72%) and SKPETRO (-5.10%). On Wall Street, US stocks had a choppy week as the overall market gyrated over the week responding to mixed economic data.

Mixed performance for our model portfolios, as overall market sentiment was weak last week. The previous week’s top performer, DIVIDEND YIELD Portfolio was the worst performer with portfolio value contracted 1.36% WoW as MITRA (-2.84%) faced profittaking selling after its share price rallied 12.10% the previous week. However, GROWTH (+0.73%) and THEMATIC Portfolios (-0.05%) outperformed the benchmark index (-0.75%). On the other hand, all our three model portfolios continued to outpace the FBMKLCI on YTD basis. THEMATIC Portfolio remained the YTD top performer which gained 6.29% while the total return of GROWTH Portfolio expanded 5.99% since 3rd of January. DIVIDEND YIELD Portfolio posted YTD total return of 3.68% which is still higher than that of 3.09% for the 30-stock index.

Gain some lose some. RHBCAP-CR (+5.00%) was the main contributor to our THEMATIC and GROWTH Portfolios last week ahead of its earnings release later today, after the alpha stock rebounded from the previous week’s loss of 2.44%. On the contrary, the previous week’s top gainer, MITRA (-3.23%) faced profit-taking activities, which is attributed mainly to the performance of the underperformer – DIVIDEND YIELD Portfolio, following a 12.10% rally the week before. Nonetheless, the decline in MITRA’s share price is not alarming, as we still believe it is one of the jewels in the construction and civil engineering sector given its strong order book of RM1.2b and tender book of RM1.75b.

Source: Kenanga