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Thursday, May 19, 2011

Today's Market Preview From HWangDBS (20 MAY 2011)

There is a chance that the key FBM KLCI would rise towards and challenge the immediate resistance threshold of 1,550 today after making a previous attempt yesterday. In essence, investors around the region are expected to be in a positive mood following the overnight increase on Wall Street with major U.S. bellwethers finishing up between 0.2% and 0.4% at the closing bell.

Possibly giving a lift to our benchmark index ahead are Tenaga (in response to the news that the government might approve an electricity tariff hike as early as next week) and RHB Capital (amid news that several parties are interested to bid for a 25% equity stake currently held by Abu Dhabi Commercial Bank).

Meanwhile, Tanjung Offshore’s share price could come under selling pressures today after its latest quarterly results came in below expectations.

Sunday, May 15, 2011

Weekly Market Preview (16 May 2011) By HWangDBS

Are we back on track? Or are we merely back to square one? In spite of last week’s bounce-up, our Malaysian bourse could still be stuck inside a trading range with the benchmark FBM KLCI probably swinging between 1,530 and 1,550 unless buying activity gathers momentum soon.

Riding on a technical rebound, the key market barometer was up 25.2-point or 1.7% through the week to settle at 1,540.74. Getting a lift also were the FBM 70 Index and the FBM ACE Index, posting a weekly increase of 1.4% and 2.4%, respectively. Daily average volume remained light though at 922.6m shares valued at RM1.4b, a marginal decline from the preceding week’s 974.6m units worth RM1.4b.

We shall look west for positive vibes to emerge in the week ahead. In addition to the usual leads coming out from Wall Street, there is the Invest Malaysia 2011 Day in the US to watch out for. This event – to be held on Tuesday and Wednesday and led by our Prime Minister himself – is designed to raise the investment profile of the country. A fruitful outcome means attracting investors to put their money in our local stock market as well as other sectors of the broad economy, in industries like high-tech engineering, oil & gas and education services.

Speaking of our economy, we will get a performance update when the 1Q11 GDP report card is out on Wednesday. Meanwhile, as the Jan – Mar quarterly corporate reporting season swings into action, more earnings announcements are expected to come in this week. By promptly cutting above the 39-day moving average (MA) line last week, we should see diminishing selling
pressures for the FBM KLCI, technically speaking. The bellwether is expected to find immediate support at 1,530, where it presently intersects with the normally defensive 39-day MA line.
Yet, after several false starts lately, it remains to be seen whether the market momentum could pick up from where it left off last week. The first resistance hurdle for the FBM KLCI to cross is 1,550, to be followed by 1,575, before we would be tempted to say a resumption of the 26-month rally is in progress.

From a regional perspective, our local bourse is still a relative laggard with a year-to-date return of just 1.4%. With upside potential still outweighing downside risk in our opinion, let’s hope a positive bias is forthcoming sooner rather than later.

Report from HWangDBS

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