Review & Outlook

Trend indicators on the FBM KLCI continued to strengthen after it climbed up to a fresh 20-month high last Friday, but accelerating overbought momentum conditions point to profit-taking consolidation which is key to support a more sustainable uptrend going forward. As such, it will be crucial for more positive domestic catalysts to sustain the uptrend, such as the proposed high speed rail from KL to Singapore and the Johor/Singapore Special Economic Zone. Meantime, with stronger-than-expected US wholesale inflation to further push expectations for a rate cut towards the later part of the year, investors are likely to stay put while assessing the latest corporate results coming from the US and locally.

Immediate overhead resistance for the index is still at 1,550, with stronger upside hurdles coming at 1,580 and 1,600. Key uptrend supports cushioning downside will be at 1,503, 1,490 and 1,473, the respective rising 30-day, 50-day and 100-day moving averages.

As for stocks picks this week, selected telco, oil & gas, gaming and semiconductor related counters such as Axiata, CelcomDigi, DNEX, Wasco, Genting Berhad, Genting Malaysia, Globetronics and Inari Amertron should attract bargain hunters to return and accumulate for further upside going forward.

News Bites

• Malaysia's GDP grew 3.0% YoY and 3.7% YoY versus forecast 3.4% and 3.8% in 4Q23 and 2023, respectively.
   
• RHB Bank Bhd has subscribed for an additional 8.6mn ordinary shares in Boost Bank for a cash consideration of RM8.6mn, maintaining its 40.0% equity interest in the digital bank.
   
• MyEG Services Bhd's joint venture company MYEG Philippines Inc has partnered with the Social Security System of Philippines to facilitate online payment of loans and contributions.
   
• Malaysian Resources Corporation Bhd has confirmed that it was appointed by Menteri Besar Selangor Inc to undertake the demolition works of the Shah Alam Stadium at a provisional contract value of RM35.0mn.
   
• A fund managed by Kenanga Investors Bhd acquired another 4.9% stake in Microlink Solutions Bhd, raising its stake in the digital systems integrator to 21.5%.
   
• Tan Chong Motor Holdings Bhd's new floating large-scale solar photovoltaic plant in Serendah, Selangor, has been commissioned and is expected to supply 1.0mn megawatt hours of green energy to Tenaga Nasional Bhd under a 25-year power purchase agreement.
   
• SNS Network Technology Bhd has secured a contract from Esri Malaysia Sdn Bhd to offer geographical information system solutions for an undisclosed value.
   
• KNM Bhd has received 2 binding and irrevocable offers to acquire the entire stake in its Italian unit FBM Hudson Italiana SpA for a total amount of 16.5mn euros (approximately RM85.0mn).
   
• The proposed disposal of Boustead Heavy Industries Corporation Bhd's 20.8% stake in the troubled Boustead Naval Shipyard Sdn Bhd to the Ministry of Finance for RM1 has been extended for the fifth time, this time to 31 March 2024.
   
• ICT Zone Asia Bhd is mulling over a proposal to transfer from the LEAP Market to the ACE Market on Bursa Malaysia, following a letter of request from its 72.9%-shareholder ICT Zone Holding Bhd.
   
• KPJ Healthcare Bhd 4QFY23 net profit rose 15.7% YoY to RM73.4mn thanks to higher patient numbers and tax writeback.
   
• The People's Bank of China held the interest rate on its one-year policy loans at 2.5% on Sunday while injecting a small amount of cash into the financial system.
   
• The US producer price index for final demand rose 0.3% last month after declining by a revised 0.1% in December

Source: TA Research - 19 Feb 2024