The local market is expected to trade sideways at between 1,810-1,842 level in view of the lack of domestic catalysts. Moving into the 2Q15, we believe the FBMKLCI is likely to be sandwiched within a near 200 point range, thus Buy-On-Weakness and active trading oriented strategies are still the preferred strategies to fit the current market dynamic. Portfolio-performance-wise, DIVIDEND YIELD was on only portfolio underperformed the benchmark by 58bps WoW. Nevertheless, all the portfolios still beat the 30-stock index by 262-1252bps on YTD total return's basis.

Seeking the next catalysts. The local market is expected to trade sideways at between 1,810-1,842 this week with the limelight likely focus on the external factors rather than the domestic issues. Key events to watch on this week include (i) US 2Q15 corporate earnings reports, which will be kicked started by Alco on 8th April, (ii) Minutes releases by Fed from March FOMC meeting, and (iii) U.S. monthly jobs report. Technically speaking, the immediate supports for the FBMKLCI are at 1,824 followed by 1,810 next, while its key resistances are at 1,842 followed by 1,860.

2Q15 strategy – cheery picking time. While we believe prevailing uncertainties (GST implementation, sovereign rating review, U.S. interest rate direction, oil price movement, etc.) will continue to overshadow the local market sentiment, the upcoming Investment Malaysia (23rd – 24th April) and 11th Malaysia Plan (May-15) could potentially provide positive news flows to the market. We believe the FBMKLCI could be trapped in a wide range-bound mode of 1,695 – 1,885, in line with its -1SD (16.3x) and +2SD (c.17.9x) forward PER valuation range. Hence, Buy-on-Weakness (at <1,790) and active tradingoriented strategy still the preferred strategies to sail through the challenging wave in 2Q15. We will continue to focus on theme plays such as (i) exporters, (ii) construction companies, (iii) resilient & consistent performers, and (iv) specific stock picking (i.e. stocks to potentially benefit from corporate exercise news flows as well as changes in benchmark index constituents and weightage).

Uptrend continues. The FBMKLCI continued its uptrend for the 3rd consecutive week and closed 1.17% WoW higher to 1,834.52, mainly buoyant by the banking and telecom sectors. The key index leaders last week included MAYBANK (2.6% WoW), PUBLIC BANK (1.9%) and TM (4.9%) while IHH (-1.5%), SAKP (-2.5%) and GENM (-1.0%) were the top three laggards. On Wall Street, stock was gained marginally, with the Dow industrials and the S&P 500 climbing 0.3% for the week as investors looked ahead to the monthly jobs report and 1Q15 corporate earnings. Meanwhile, the volatile first quarter saw the U.S. major indexes bounce in and out of positive territory as stocks have generally faced pressure from a rising dollar, falling oil prices and uncertainty about the timing of an expected interest hike from the Federal Reserve in 1Q15.

Mixed performance. GROWTH and THEMATIC Portfolios outperformed the 30-stock index last week and recorded gains of 1.52% and 1.48% WoW, respectively. DIVIDEND YIELD Portfolio, however, inched up by 0.59% in contrast to the FBMKLCI (+1.17%). All our stock's selection recorded a positive week-on-week growth, except PHARMANIAGA and BTOTO, which recorded a flattish performance on last week. On a YTD basis, GROWTH Portfolio continued to be the top gainer with total returns of 17.80% followed by THEMATIC Portfolio (+11.33%) and DIVIDEND YIELD Portfolio (+7.90%), clearly outpaced the 30-stock index performance (+5.28%).

Source: Kenanga Research - 6 Apr 2015