We still expect the local market to trend lower this week as the FBMKLCI failed to convincingly break above its multi-month resistance level of 1,820 last week amid lack of catalyst to spur market sentiment. This is also supported by the still sluggish crude oil prices and continued weakening of MYR that saw it hitting new lows last Thursday and Friday. As such, technically the local market is expected to trade between 1,783 and 1,815 with a bearish bias this week. Following our new end-2015 index-target of 1,865 released last week, we prefer to adopt a “Buy-on-Weakness” Strategy <1,800 given the limited upside from here. On the other hand, all our three portfolios underperformed the benchmark by 26-174bps WoW. However, they beat the 30-stock index by 77-984bps on a YTD total returns basis.

Not out of the woods yet. Two key issues are still bothering us. Firstly, crude oil prices are still sluggish although it recovered quite a fair bit from the bottom. More crucially, the MYR appears unable to find a bottom as it continued to fall to new lows last week against the greenback. With the GST implementation just around the corner, investors are more cautious. All these do not augur well for the market sentiment in the near-term as there is no fresh catayst to cheer the market up. Technically, as the FBMKLCI failed to convincingly break above its multi-month resistance area of 1,820/30 last week, we expect the market to trade between 1,783 and 1,815 this week with a bearish outlook. On other hand, we have lowered our end-2015 index-target to 1,865 last Tuesday from 1,905 previously post-4QCY14 results reviews. In view of limited upside potential, we prefer to adopt “Buy-on-Weakness” Strategy <1,800.

Trying to find its ground. The local market had a slow start last week on profit-taking activities after yet another disappointing 4QCY14 reporting season, which saw brokers trimming their year-end index-targets. However, the FBMKLCI managed to recover subsequently but was dragged down again as the MYR hit new lows and SKPETRO (-15.44%) fell heavily after businessman Mokhzani and his partner resigned from the board of the oil & gas company. Overall, the market still traded within a tight range of 20 index-points with subdued trading volume. At last Friday’s closing bell, the FBMKLCI closed 14.25pts or 0.78% lower to settle at 1,806.96. SKPETRO was the weekly top market loser followed by GENTING (- 3.62%) and CIMB (-2.18%) On Wall Street, the US stocks started the week with a bang as the Dow hit yet another record high but cautious trading ahead of the job data releases towards the end of the week pulled the index lower. However, the Dow rebounded last Thursday, partly due to bargain hunting activities ahead of the release of job data on Friday. Nonetheless, the rebound was not inspiring given that trading volume remained subdued.

Our portfolios underperformed the market. Last Tuesday, we added 5,000 share and 10,000 shares of CAB (+13.04%) into our THEMATIC and GROWTH Portfolios, respectively, for its earnings growth story. However, we cut loss on ALAM (- 5.92%) last Wednesday, which resulted in a loss of RM975 in the THEMATIC Portfolio as the share price traded near to the previous cut-loss level and the anticipated rebound in crude oil prices did not materialise. Portfolio performance-wise, all our three portfolios underperformed the FBMKLCI as almost all our invested stocks declined over the week except PHARMA (+1.96%), BJTOTO (+1.19%) as well as the new stock CAB. THEMATIC Portfolio was the weekly loser with a 2.52% drop in investment value, pulling YTD total returns to 13.46%, against the barometer index’s -0.78% WoW and 3.62% YTD total returns. DIVIDEND YIELD Portfolio saw its YTD total returns reduced to 4.39% after a 2.15% weekly losses while GROWTH Portfolio’s YTD total returns also declined to 13.46% after a 1.04% weekly drop. 

Source: Kenanga