Weekly Market Preview ( 23 May 2011 )
Momentum is the fuel to stock market advances. Without this inner strength, the likelihood is that the FBM KLCI could still be boxed inside a trading range for the time being.
The benchmark index recovered further initially, hitting a high of 1,550.62 before ending at 1,541.03 last week, little changed from the close of 1,540.74 two Fridays ago. Finishing mixed were the FBM 70 Index and the FBM ACE Index with a weekly change of +0.7% and -0.1%, respectively. Trading activity, meanwhile, stood at a daily average of 882.8m shares in volume (from 922.6m units) and RM1.5b in value (from RM1.4b) during the holiday-shortened week.
After a climb of 25.5-point or 1.7% in two successive weeks, the FBM KLCI is just 1.5% higher than where it was at the beginning of the year. In terms of regional ranking, Malaysia is presently in sixth position (out of 11 Asian equity indices tracked by us), behind the top winning markets – Indonesia (+4.6% year-to-date), Thailand (+3.9%) and Korea (+2.9%) – but ahead of the worst performers, namely India (-10.6%), Japan (-6.1%) and Taiwan (-1.5%).
Fundamentally speaking, given a prevailing shortage of macro catalysts to trigger a broad market run-up, investors may want to use a bottom-up approach to identify individual stocks that could lift our Malaysian bourse performance. On the corporate scene this week, the interest will be on: (a) Tenaga, as the government may announce electricity tariff hikes on Wednesday according to media sources. Using last Friday’s close of RM6.27 as the reference level, a 5% swing in the share price would translate to a gain or loss of 4-index point in the FBM KLCI; and (b) big-cap listed companies like Telekom Malaysia, KL Kepong, Genting group of companies, Sime Darby and IJM Corporation that have yet to release their Jan-Mar quarter financial results.
From a charting perspective, there is no clear technical signal yet to say a breakout in the FBM KLCI is imminent anytime soon. Even so, we foresee a fairly resilient performance ahead with the index likely to find immediate support around the historically defensive 39-day moving average line. Our first two support levels are pegged at 1,530 and 1,495, respectively.
On the upside, gradual as it may be, the FBM KLCI could be showing a sideways trading pattern with a positive bias going forward. This means the key market barometer may be making its way to challenge the resistance targets of 1,550 (immediate) and 1,575 (next) eventually.
Report from HWangDBS
The benchmark index recovered further initially, hitting a high of 1,550.62 before ending at 1,541.03 last week, little changed from the close of 1,540.74 two Fridays ago. Finishing mixed were the FBM 70 Index and the FBM ACE Index with a weekly change of +0.7% and -0.1%, respectively. Trading activity, meanwhile, stood at a daily average of 882.8m shares in volume (from 922.6m units) and RM1.5b in value (from RM1.4b) during the holiday-shortened week.
After a climb of 25.5-point or 1.7% in two successive weeks, the FBM KLCI is just 1.5% higher than where it was at the beginning of the year. In terms of regional ranking, Malaysia is presently in sixth position (out of 11 Asian equity indices tracked by us), behind the top winning markets – Indonesia (+4.6% year-to-date), Thailand (+3.9%) and Korea (+2.9%) – but ahead of the worst performers, namely India (-10.6%), Japan (-6.1%) and Taiwan (-1.5%).
Fundamentally speaking, given a prevailing shortage of macro catalysts to trigger a broad market run-up, investors may want to use a bottom-up approach to identify individual stocks that could lift our Malaysian bourse performance. On the corporate scene this week, the interest will be on: (a) Tenaga, as the government may announce electricity tariff hikes on Wednesday according to media sources. Using last Friday’s close of RM6.27 as the reference level, a 5% swing in the share price would translate to a gain or loss of 4-index point in the FBM KLCI; and (b) big-cap listed companies like Telekom Malaysia, KL Kepong, Genting group of companies, Sime Darby and IJM Corporation that have yet to release their Jan-Mar quarter financial results.
From a charting perspective, there is no clear technical signal yet to say a breakout in the FBM KLCI is imminent anytime soon. Even so, we foresee a fairly resilient performance ahead with the index likely to find immediate support around the historically defensive 39-day moving average line. Our first two support levels are pegged at 1,530 and 1,495, respectively.
On the upside, gradual as it may be, the FBM KLCI could be showing a sideways trading pattern with a positive bias going forward. This means the key market barometer may be making its way to challenge the resistance targets of 1,550 (immediate) and 1,575 (next) eventually.
Report from HWangDBS
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