Tuesday, December 20, 2011

Dow Jones: Crucial Uptrend Line Support Near 11500 Points To Prevent Further Downside

Wall Street recap: Dow Jones down 100 points on Europe woes
The Dow surrendered the earlier 59-pt gain to end 100 points lower at 11766, mainly due to the fall in financials after investors worried that Basel III capital requirements would provide another blow to the industry. Sentiment was also jolted by ECB’s President cited substantial risks to the economy and said the ECB can’t step up government bond purchases under its founding piece of legislation.

Meanwhile, European finance ministers failed to agree on raising the joint ceiling for the European Stability Mechanism and European Financial Stability Facility.

DJIA outlook: Crucial 11500 support levels
The Dow Jones had retreated 4.2% to end at 11766 from its recent high of 12284 (27 Oct). The fall was driven by the persistent deadlock in Euro debts crisis management and an uncompromised plan and fears of potential en-mass bonds rating downgrades by credit rating agencies, overshadowing the gradual progresses in the recent US economic data.

Following the breakdown of 200-d SMA (11936), mid Bollinger band (11831) and 50-d SMA (11821) supports coupled with the negative technical readings, the Dow may retest lower uptrend line and 100-d SMA supports near 11500. A violation of 11500 will push index lower towards a more solid support of lower Bollinger band at 11250.

Immediate resistance levels are 11936-12284 levels.

Daily DJIA: Crucial Uptrend Line Support Near 11500 Points To Prevent Further Downside
DowJones20-12-2011



Source: StockCharts.com

KLCI: Upside Bias Following The Strong Breakout

Bursa Recap: KLCI up 11.6 points, bucking regional slump
Regional bourses fell amid concerns over more downgrade warnings on Europe sovereign bonds and fears of regional instability after the death of North Korea leader Kim Jong il,

Bucking the downtrend, FBM KLCI jumped 11.6 points to 1477.8, spurred by window dressing activities on selected index-linked counters such as AXIATA (+14 sen to RM5.00), DIGI (+8 sen to RM3.70), GENTING (+16 sen to RM10.54), YTL (+8 sen to RM1.54) and CIMB (+5 sen to RM7.05).

FBM KLCI Outlook: Holding well above 1450
Technical readings have turned better following yesterday 11.6 points gain to stage a strong breakout above the downtrend line. However, given the persistent negative headlines from Europe and thin volume ahead of the year-end holidays, we expect the local bourse to remain volatile albeit with an upward bias due to the window dressing activities.

Immediate crucial support is the 50-d SMA or uptrend line (1458), followed by last week’s low at 1448. A breakdown of 1448 would mean that the rally from 1311 low (Sep 26) is likely exhausted and will head toward lower Bollinger band (1428). Resistance levels are 38.2% FR (1487) and 200-d SMA (1502).

Daily KLCI: Upside Bias Following The Strong Breakout
FBM KLCI 20-12-2011



Source: HLIB Research

Monday, December 19, 2011

Daily DJIA: More Range Bound Consolidation Ahead

Wall Street recap: Dow Jones ends flat to record a 2.6% weekly decline
The Dow Jones jumped as much as 99pts buoyed by recent positive economic data and an easing inflation in November that could create room for Fed stimulus in 2012.

However, the gains evaporated after Fitch put 7 Europe countries (i.e. France, Belgium, Spain, Slovenia, Italy, Ireland and Cyprus) on credit watch negative, citing the higher probability that it could downgrade these nations in the next few months. The sell-off was also driven by the "quadruple-witching”.

Daily DJIA: More Range Bound Consolidation Ahead
DowJones19-12-2011



Source: StockCharts.com

Sunday, December 18, 2011

KLCI: Window Dressing Activities To Cushion External Swings

Bursa Recap: KLCI up 2.1 points to notch a 0.4% weekly gain
In the wake of the US better-than-expected weekly jobless claims and December Philly Fed manufacturing reports, Asian markets rose, discounted concern over Europe’s debt crisis and Fitch’s downgrade of 5 major European groups.

KLCI also inched up 2.1 pts to record a 6.1 pts weekly gain, supported by PBBANK (+22 sen to RM13.02), CIMB (+8 sen to RM7.00), PETCHEM (+8 sen to RM6.16), YTL (+5 sen to RM1.46) and PPB (+36 sen to RM16.76).

FBM KLCI Outlook: Window dressing activities to cushion external swings
For the next two weeks, Bursa Malaysia’s trading volume is expected to be low, with many market players taking time off ahead of the holidays, as low trading volume tends to exaggerate swings in the market.

Despite external volatility, we remain cautiously optimistic that the KLCI is likely to offer some counterbalance to the uncertainty in Europe and advocate the strategy of buy on weakness and take profits in any rebound, in anticipation of year-end window dressing activities, potential Chinese New Year and pre-election rallies as well as sufficient domestic catalysts and fiscal stimuli that will support a modest economic growth in 2012.

Immediate crucial support is the 50-d SMA or uptrend line (1456), followed by last week’s low at 1448. A breakdown of 1448 would mean that the rally from 1311 low (Sep 26) is likely exhausted and will head toward lower Bollinger band (1425) and 61.8% FR (1420) supports. Resistance levels are 10-d SMA (1471), 38.2% FR (1487) and 200-d SMA (1502).

Daily KLCI: Consolidating Upwards
FBM KLCI 19-12-2011



Source: HLIB Research

Friday, December 16, 2011

DJIA: More Consolidation Ahead As Technical Indicators Heading Lower

Wall Street recap: Dow reduces earlier 144-pt gain to 45 points
After plunging 361 points in last three days, the Dow staged a technical rebound to as high as 144 points before ending only +45 points at 11867 on profit- taking.

The improvement was mainly due to a better-than-expected weekly jobless claims and Dec Philly Fed manufacturing reports which overshadowed concern over Europe’s debt crisis and Fitch’s downgrade of 5 major European groups.

Daily DJIA: More Consolidation Ahead As Technical Indicators Heading Lower
DowJones16-12-2011



Source: StockCharts.com

KLCI Uptrend Intact As KLCI Reclaimed 1450

Bursa Recap: KLCI ends +1-point after tumbling as much as 14.6 points
Asian markets continued its southbound journey after Dow fell 1.1% overnight and commodity prices plunged on mounting fears about euro-zone debt troubles and Fitch’s downgrade of 5 major European groups. Concern about Asia’s economic health also contributed to the sell-off following lower-than-expected China’s and Japan manufacturing reports.

Mirroring negative vibes from abroad, KLCI tumbled as much as 14.6 points to 1448.5 before bargain hunting on selective bluechips spurred the KLCI into a marginal 1-pt gain at 1464.1.

FBM KLCI Outlook: Uptrend still intact
The local bourse displayed some resilience yesterday as it managed to recouped a 14.6-pt loss to end 1-pt marginally higher and closed above the uptrend line support, despite overnight Dow Jones’ fall and sluggish regional markets.

We remain cautiously optimistic that the KLCI is likely to offer some counterbalance to the uncertainty in Europe and advocate the strategy of buy on weakness and take profits in any rebound, in anticipation of year-end window dressing activities, potential Chinese New Year and pre-election rallies as well as sufficient domestic catalysts and fiscal stimuli that will support a modest economic growth in 2012.

Immediate crucial support is the 50-d SMA or uptrend line (1454). A breakdown of 1454 would mean that the rally from 1311 low (Sep 26) is likely exhausted and will head toward lower Bollinger band (1426) and 61.8% FR (1420) supports. Resistance levels are 10-d SMA (1476), 38.2% FR (1487) and 200-d SMA (1502).

Daily KLCI: Uptrend Remains Intact As Index Reclaims Above 50-Days SMA
FBM KLCI 16-12-2011



Source: HLIB Research

Axiata Berhad: Fruitful Dialog with Suntel

16 December 2011
Price Target: RM4.92
Share Price: RM4.90


News
# In its filing to Bursa Malaysia, Axiata announced that Dialog has entered into a Share Purchase Agreement (SPA) to acquire 100% of the ordinary shares of Suntel Ltd from its current shareholders.

# The acquisition price tag is in the range of USD33.9m and USD34.9m, corresponding to a valuation multiple of 3.0x to 3.1x of the EBITDA of Suntel for financial year ended 31 December 2010. This purchase will be financed via internal generated funds.

# The SPA stipulates the fulfillment of the conditions precedent within a maximum period of 6 months from the date of the SPA.

# Suntel is the second largest fixed telco in Sri Lanka with 382 base stations offering fixed voice solutions, data solutions, data center and managed services.

Financial impact
Although the acquisition cost is perceived to be relatively cheap comparing to Axiata’s EV/EBITDA of 5.7x for FY11, Suntel’s contribution to the bottom line is not expected to be very positive assuming high gearing and hefty depreciation cost as a result of CAPEX intensive nature of the telecommunication business.

Comments
# However, we view this positively as this acquisition will allow Dialog expand its market share especially in the corporate and SME segments. The firm said that the merged entity will have 23% of the fixed access market share.

# The merger would allow Dialog to enjoy greater cost savings and efficiency through economy of scale and scope. This can be achieved by consolidating radio sites, sharing transmissions / backhaul, data centers, marketing (crossselling) and rationalizing distribution network.

# We have cross checked with Axiata that Dialog does not need to surrender Suntel’s spectrum licenses to the government after the acquisition.

Catalysts
- Higher smartphone penetration boosting data ARPU.
- Strong growth in low penetration developing markets.
- More cost savings from collaboration with DiGi.

Risks
Regulatory risks, FOREX fluctuations & competitive risks.

Forecasts
Unchanged.

Rating: HOLD, Target Price: RM4.92
Positives
Despite the challenging 3Q11, Axiata’s main businesses (Celcom, XL, Dialog) continue to execute well.


Negatives
Exposure to Indian telecom market which is currently under close scrutiny by the government.

Valuation
We reiterate our HOLD call with unchanged target price of RM4.92. We opine that the robust growth story may have come to an end especially for Celcom and XL who are the
main contributors as market matures and competition intensifies.



Source: HLIB Research

Thursday, December 15, 2011

DJIA & VIX: Daily VIX Is Grossly Oversold

DJIA: Downside bias amid weakening technicals
Deteriorating economic outlook and debt crisis in Europe coupled with the prospect of mass credit ratings downgrade in Europe as well as the latest batch of China weak economic data has resulted in volatile market swings, risk aversion, vulnerability
and growing demand for safe havens.

After rebounding from 25 November low of 11232 points, the Dow surged to as high as 12266 on 7 December before retreating lower to close at 11823 yesterday, below the 200-d SMA of 11942 points.

Following the breakdown of 200-d SMA and mid Bollinger band (11829) as well as the weakening technical outlook, downside risks of Dow Jones has increased. Further supports are 11774 (50-d SMA and uptrend line support near 11600. Immediate resistance levels are 11942, 12000 and 12266 levels.

VIX: Anticipating a technical rebound
The European euphoria was short-lived as investors fear resumed this week given the VIX, also known as the "fear indicator, rose from recent low of 23.3 to end at 26.0 yesterday, above the long term uptrend of 200-d SMA at 25.6.

In view of the grossly oversold indicators, we may witness possible technical rebound in the coming days amid rising external woes. A breakout above the downtrend channel near 30 will likely to prompt more upside towards 35.0-36.0 territory, triggering an alarm bell to Dow and global equity markets.

Immediate supports are 23.3 and 20.0.

Daily VIX: Grossly Oversold
VIX index 15-12-2011



Source: HLIB Research

Daily DJIA: Downside Bias As Technical Indicators Are Worsening

Wall Street recap: Dow Jones drops 131 points, its 4th decline in five sessions
The Dow Jones slid for a third day and hit its lowest level in two weeks amid widespread risk aversion that sent commodity prices tumbling, drove the euro to its lowest in a year and forced Italy to pay a euro-era high to sell debt.

The Italian sovereign debt auction saw the euro zone's 3rd largest economy pay a euro era record yield of 6.47% to sell five year paper, following the EU summit that tried to move towards greater fiscal integration last week.

Daily DJIA: Downside Bias As Technical Indicators Are Worsening
DowJones15-12-2011



Source: HLIB Research

FBM KLCI HasMore Downward Correction If 1450 Support Falters

Bursa Recap: KLCI inches down 2.3 points at 1463.1
Regional markets continued its downtrend as the Eurozone debt crisis, fear of more credit downgrades and no fresh pledges from Fed on further stimulus kept investors on the sidelines.

Mirroring regional markets’ pessimism, KLCI was 2.3 pts lower at 1463.1, driven by losses in GENTING (-22 sen to RM10.42), KLK (-50 sen to RM22.60), AMMB (-10 sen to RM5.76), GENM (-5 sen to RM3.85) and IOICORP (-3 sen to RM5.09).

FBM KLCI Outlook: More downward correction if 1450 support falters
Ongoing doubt over the euro-zone debt crisis and prospect of mass euro zone sovereign rating downgrades should continue to dampen investors’ sentiment and encourage wild swings in the financial markets.

Immediate crucial support is the 50-d SMA or uptrend line (1450). A breakdown below 1450 would mean that the rally from 1311 low (September 26) is likely exhausted and will head toward lower Bollinger band (1426) and 61.8% FR (1420) supports.

Resistance levels are 10-d SMA (1476), 38.2% FR (1487) and 200-d SMA (1502).

Daily KLCI: Uptrend Line Support Looks Shaky



Source: HLIB Research

Wednesday, December 14, 2011

Daily DJIA: Downside Bias Amid Weakening Technicals

Wall Street recap: Dow Jones drops 66 points to 11955 amid fed disappointment
Against a weak growth in Nov retail sales, the Dow Jones jumped as much as 126 points following a better-than-expected Spain bonds auctions and Germany investor confidence report.

However, the Dow Jones cancelled all gains and dropped 66 points to end below 12k after German Chancellor Angela Merkel again rejected any increases in the bailout fund for European sovereign debt and the Fed delivered little hope that it would turn on the easing spigots anytime soon.

Daily DJIA: Downside Bias Amid Weakening Technicals
DowJones14-12-2011



Source: StockCharts.com

KLCI: Critical Support Near 1450 Points

Bursa Recap: KLCI down 1.7 points from as much as -9.8 points intraday
Regional markets fell given that investor’s sentiment remained jittery as the Eurozone debt crisis and fear of credit downgrades in that region kept investors on the sidelines. Sentiment was also cautious ahead of the release of U.S. Nov retail sales report and FOMC meeting outcome tonight.

Mirroring regional markets’ pessimism, KLCI lost as much as 9.8 points before narrowing its losses to -1.7 points at 1465.4.

FBM KLCI Outlook: Critical 50-d SMA support

Volatility is here to stay for a while in the wake of external woes, particularly from Europe. While Europe is on the prescribed path, time is needed to finally resolve the debt issue. Hence, we still advocate the strategy of buy on weakness and take profits in any rebound, in anticipation of year-end window dressing activities,
potential Chinese New Year and pre-election rallies as well as sufficient domestic catalysts and fiscal stimuli that will support a modest economic growth in 2012.

Immediate crucial support is the 50-d SMA or uptrend line at 1450. A breakdown below 1450 would mean that the rally from 1311 low (September 26) is likely exhausted and will head toward lower Bollinger band (1426). Resistance levels are 10-d SMA (1476), 38.2% FR (1487) and 200-d SMA (1502).

Daily KLCI: A Breakdown Of Uptrend Line Support Will Be Negative For The Market
FBM KLCI 14-12-2011


Source: HLIB Research

Wednesday, December 7, 2011

Global Market Weekly Review, 29 November - 2 December 2011

Euro-area finance ministers agreed to extend the capacity of the European Financial Stability Fund (EFSF) by “introducing sovereign bond practical risk participation and a co-investment approach,” the EFSF said. The EFSF has a current lending capacity of €440 billion. The EFSF should be able to leverage its own resources of up to €250 billion. “Under the partial-risk protection, EFSF would provide a partial protection certificate to a newly issued bond of a member state,” the statement cites Klaus Regling, EFSF chief executive officer, as saying.

The Philippines kept its benchmark interest rate unchanged for a fifth meeting as persistent inflation prevented the central bank from joining Indonesia and Thailand in cutting borrowing costs to bolster growth. Bangko Sentral ng Pilipinas kept the rate it pays lenders for overnight deposits at 4.5%. The decision was predicted by 14 of 17 economists in a survey.

US stocks declined as better-than-forecast manufacturing growth and a rally in French and Spanish bonds were not enough to extend the biggest three-day gain in the Standard & Poor’s 500 Index since March 2009. The S&P 500 slid 0.2% to 1,244.58. The Dow Jones Industrial Average decreased 25.65 points (-0.2%) to 12,020.03.


Source: ING Funds Berhad

Malaysia Fixed Income Market Review, 29 November - 2 December 2011

Fixed Income
Buying momentum on Malaysian Government Securities (MGS) improved during the week under review, on the back of a stronger Ringgit and improved risk appetite along regional stock and debt markets. Gains were recorded mostly along the front and bellies of the yield curve with the 3-, 5- and 7-year benchmark yields falling by 9, 6 and 4 basis points week-on-week (WoW) respectively to 3.05%, 3.24% and 3.54%. Meanwhile, the 10-year benchmark MGS yield fell by 1 basis point WoW to 3.74%. For the 5-year MGS reopening auction, the RM3.0 billion auction garnered rather mild interest, with a bid to cover ratio of 1.78x at an average yield of 3.303%.

Of note, the foreign holdings of Ringgit-denominated MGS climbed higher in October at RM94 billion (34% of the outstanding MGS) after some unwinding of positions in September.

For Private Debt Securities (PDS) market, trading was largely focused on AA-rated papers, and followed by AAA-rated papers. Banking and power sectors remained as investor’s top pick.

Fixed Income Outlook
Local government bond market will continue to take hints from the development in the Eurozone and the US Treasuries in charting its direction. On economic front, despite the expectation of a moderating growth prospect in Malaysia for the last quarter of the year, the Economic Transformation Programme and a healthy domestic spending, should help to achieve the projected 5-6% Gross Domestic Product (GDP) growth for 2011.

As for the final government bond auction for this year, we believe the 3-year Government Investment Issues (GII) reopening auction should be well received. Meanwhile, investors are waiting for the new auction calendar for 2012 to better gauge demand supply dynamics of the government bond segment for next year.

We expect corporate bond market to be well supported for the rest of the year and investor may continue to extend duration on tame inflation and stable interest rate outlook.

Fixed Income Strategy
We remain positive on local bond market in general with focus on value enhancing corporate bonds. We look to participate in new issuances for further diversification and yield enhancement.



Source for MGS levels: Bond Pricing Agency
Source: ING Funds Berhad

FBM KLCI Closes The Week On Positive Territory, 29 Novermber - 2 December 2011

Equity
It was a good week for equity as the concerted effort by several central banks to slash the penalty rate on dollar liquidity generated positive sentiment. It managed to break the 1,500 points on Thursday before tapering off to 1,489 points as investors accumulate blues that have strong fundamental. For the week, the FBM KLCI jumped 57 points or 4% to 1,489points and briefly broke through the 1,500 points level before easing back. The FBMKLCI underperformed the region for the first time in five weeks as up to Thursday the index was up 3.8% against the steeper 8.7% surge by the MSCI FExJ. Average daily trading value for the week rose 54% to RM1.75 billion (RM1.14 billion previously), which was 11% above the three-month average of RM1.57 billion.

Equity Market Outlook
We believe the market still has strength to move further underpinned by policy respond and seasonality. In the short term, we expect the market continue to consolidate with upward bias as investors position themselves for year end window dressing. On the downside, the market immediate support is at 30 days smooth moving average (SMA) situated at 1,464 points.

Equity Market Strategy
Stock picking is still our strategy with preference for liquid fundamental stocks on weakness.



Source: ING Funds Berhad

DJIA Shows Upside Bias Following A Breakout Above The Downtrend Line

Wall Street recap: Dow Jones rises 52 points amid EU optimism
Dow Jones soared as much as 118 points intraday amid a report that EU officials may be creating two separate rescue funds to help contain the region's ongoing sovereign debt crisis. Negotiators are considering allowing the existing €400 billion European Financial Stability Facility (ESTF) fund to continue running when a new €500 billion facility known as the European Stability Mechanism (ESM) comes into force in mid-2012.

Nevertheless, the early gains were cut to 52 points as S&P said it is considering downgrading the EFSF.

Daily DJIA Shows Upside Bias Following A Breakout Above The Downtrend Line
DowJones07-11-2011


Source: StockCharts.com

KLCI Market To Remain Choppy Ahead Of The EU Summit

Bursa Recap: KLCI ends flat on profit taking
Asian markets fell after S&P warned it might downgrade euro zone countries en masse if the EU summit on Dec 8-9 fails to produce a credible plan to solve the region's debt crisis. The warning brought to a halt a rally in global equities that began last week, spurred by the world's six major central banks moved to tame potential liquidity crunch for European banks by providing cheaper dollar funding, along with monetary easing in China.

Tracking regional losses, KLCI closed 9 points lower at 1480.9, driven by losses in CIMB (-12 sen to RM7.09), MAYBANK (-9 sen to RM8.20), TENAGA (-7 sen to RM5.65), GENTING (-10 sen to RM10.82) and AXIATA (-4 sen to RM4.95).

FBM KLCI Outlook: Choppy ahead of EU summit
Ahead of the EU summit and the S&P’s downgrade warnings on euro zone countries en masse, the local bourse will waver for the rest of this week.

Technically, KLCI is looking lethargic after the 9 points fall yesterday, with crucial supports at the mid Bollinger band (which is also the 20-days SMA at 1465) and 100-day SMA (1471) levels. A breakdown below 1465 support will accelerate more selling pressures towards 50-d SMA (1440) and recent low of 1423 (November 23). Immediate resistance remains at 200-d SMA (1503).

Daily KLCI Shows Crucial Support At 1465
FBM KLCI 07-11-2011



Source: HLIB Research

Thursday, December 1, 2011

Axiata Berhad: 3Q11 Results Briefing

2 December 2011
Price Target: RM4.92
Share Price: RM4.93


Highlights
Axiata recorded a strong subscriber growth of 26% yoy reaching 186.9m customers despite softening key markets. Revenue growth continues to be driven by significant increase in data particularly at XL and Celcom with YTD growth of 50% and 29% respectively.

Celcom subscriber base declined to 11.4m (2.7m postpaid and 8.7m prepaid) due to rationalization of multi-SIM user and we think this is the reason that ARPUs are elevated (postpaid +RM3 to RM95 while prepaid +RM1 to RM37). Meanwhile, MoU broke its down trend and came in higher +6% qoq at 210mins thanks to the festive season in 3Q. Wireless broadband contributed RM197m with +6% qoq on the back of 924k subscribers. Smartphone penetration is 15%.

XL successfully gained momentum and acquisition through new offerings with 12% subscribers increase qoq reaching 43.4m. Prepaid ARPU stagnated at IDR31k while postpaid plunged to IDR171k or declined -17% qoq even though 3Q should have the benefit of festive season. XL explained that lower outgoing MoU is due to shifting in subscribers’ behavior from voice to SMS and data usage. Smartphone penetration is 11%.

Dialog recoded a healthy growth in revenue mainly contributed by mobile, TV and infra businesses. ARPU increase 8% qoq driven by increase take up of premium VAS products. MoU growth mainly by prepaid due to increase in affordability.

Robi qoq revenue growth attributed mainly to VAS including data services and interconnect business. PAT decreased qoq by FOREX loss and accelerated depreciation on old swapped equipment due to network modernization.

Catalysts
- Higher smartphone penetration boosting data ARPU
- Strong growth in low penetration developing markets.
- More cost savings from collaboration with DiGi.

Risks
Regulatory risks, FOREX fluctuations & competitive risks.

Forecasts
Updated with latest guidance on higher CAPEX and depreciation along with tweaking lower our assumptions of subscriber base and ARPU. Our FY11-FY13 EPS are revised lower by -9.0% to -10.7%.

Rating - HOLD, Target Price: RM4.92
Positives
Despite the challenging 3Q11, Axiata’s main businesses (Celcom, XL, Dialog) continue to execute well.

Negatives
Exposure to Indian telecom market which is currently under close scrutiny by the government.

Valuation
We keep our HOLD call as we cut out target price by 9% to RM4.92 from RM5.44. We opine that the robust growth story may have come to an end especially for Celcom and XL who are the main contributors as market matures and competition intensifies.



Source: HLIB Research

Daily DJIA Is Drifting Sideways

Wall Street recap: Dow Jones eases 26 points after surging 4.2% on November 30
After spiking 4.2% on November 30, Dow Jones drifted 26 points lower to 12020 overnight amid an unexpected rise in weekly jobless claims and ahead of the crucial Oct job data tonight.

However, overall sentiment remained firm in the wake of the stronger-than-expected Nov ISM and Oct construction spending figures.

Daily DJIA Is Drifting Sideways
DowJones02-11-2011



Source: StockCharts.com

KLCI Is Having More Sideways Trading After Surging 54 Points In 3 Days

Bursa Recap: KLCI up 13.2 points, off day high of +30 points
Despite easing China’s Nov PMI to 49 from 50.4 in October, Asian markets surged after the world's six major central banks moved to tame a liquidity crunch for European banks by providing cheaper dollar funding, along with monetary easing in China.

Tracking the strong Asian markets, FBM KLCI closed 13.2 points higher at 1485.3, off intra-day high of 1,502.5 (+30.4 points). Leading movers were IOICORP (+17 sen to RM5.18), PBBANK (+20 sen to RM12.74), PETCHEM (+18 sen to RM6.17), MAYBANK (+9 sen to RM8.39) and DIGI (+8 sen to RM3.60).

FBM KLCI Outlook: More sideways trading after surging 54 points in 3 days
On the backdrop of a 3-day 54 points jump and a gravestone Doji formation yesterday, KLCI is likely to encounter more profit taking activities ahead but any selling pressures are likely to be well-absorbed as technical indicators remain positive.

As long as the KLCI is able to maintain its posture above the uptrend line support near 1440 points, we remain short term positive on KLCI. Immediate resistance remain at 200-d SMA (now at 1504) whilst supports are situated at 100-d SMA (1474 points), 1463 (mid Bollinger band) and 50% FR (1454).

Daily KLCI Is Having More Sideways Amid A Gravestone Doji Formation
FBM KLCI 02-11-2011



Source: HLIB Research

Wednesday, November 30, 2011

Global Market Weekly Review, 20 - 26 November 2011

A special debt-reduction committee in the US Congress failed to reach agreement, extending partisan gridlock into the 2012 election year and setting the stage for US$1.2 trillion in automatic spending cuts. Standard & Poor’s said it would keep the US government’s credit rating at AA+ after the super-committee’s announcement. S&P, which stripped the US of its top AAA grade on 5 August 2011, said it decided that the failure didn’t merit another downgrade.

The International Monetary Fund (IMF) revamped its credit line program to encourage countries facing outside shocks to turn to the fund with few conditions attached, as European leaders fail to end their debt turmoil. The IMF said the new instrument, the Precautionary and Liquidity Line, can be tapped by countries with strong economies currently facing short-term liquidity needs. Funding available will be capped at a percentage of countries’ contributions to the fund, limiting the role the instrument can play in preventing the debt crisis from spreading in Europe.

China widened efforts to support cash-strapped companies in Zhejiang and rural areas hit by a credit squeeze that’s slowing the second-largest economy just as Europe’s debt crisis saps export demand. The People’s Bank of China cut the reserve ratio for more than 20 rural credit cooperatives nationwide by half a percentage point where small businesses have complained about lack of access to credit. The Chinese central bank’s move reduces the percentage of deposits the cooperatives are required to park with the central bank to 16%, a “normalization” after an increase a year ago.


Source: ING Funds Berhad

Malaysia Fixed Income Market Review, 20 - 26 November 2011

Fixed Income
Malaysian Government Securities (MGS) trade momentum was weaker last week compared to previous week. Profit-taking activities, especially along the shorter-dated tenures reversed previous week’s gain with yields rising across the curve. This was partly due to October Consumer Price Index (CPI) number being higher than expected as well as the weakening ringgit. On a week-onweek (WoW) basis, the 3- and 5-year benchmarks yields rose by 6 and 11 basis points (bps) respectively to 3.14% and 3.30%. Meanwhile, the 10-year benchmark yield climbed 3bps to close on Friday at 3.75%.

On economic front, CPI increased by 3.4% year-on-year (YoY) in October 2011, the same pace as in September 2011 but was higher than consensus forecast of 3.3%. The increase in CPI was due to higher food and transportation costs.

For Private Debt Securities (PDS) market, interests were seen skewed towards AAA-rated papers, led by debut of a banking-related bond and a power-related bond. This was followed by interest in AA-segment, which are mainly banking, toll and power sectors.

Fixed Income Outlook
Local government bond market will continue to take hints from the development in the Eurozone and the US Treasuries in charting its direction. Meanwhile, release of the better than expected 3Q2011 Gross Domestic Product (GDP) number has rather muted
impact to the local bond market as this may signal expectation of a moderating growth prospect for the last quarter of the year. Nevertheless, given the roll-out of certain committed investments under the Economic Transformation program, coupled with healthy domestic spending, Malaysia seems to be on track to achieve the projected 5-6% growth for 2011.

There are two remaining government bond auctions for the rest of the year. We expect the last two auctions to be well received. Meanwhile, investors are waiting for the new auction calendar for 2012 to better gauge demand supply dynamics of the government bond segment for next year.

We expect corporate bond market to be well supported for the rest of the year and investors may continue to extend duration on tame inflation and stable interest rate outlook.

Fixed Income Strategy
We remain positive on local bond market in general with focus on value enhancing corporate bonds. We look to participate in new issuances for further diversification and yield enhancement.



Source for MGS levels: Bond Pricing Agency
Source: ING Funds Berhad

KLCI Market: Concerns Over Eurozone Dampen Market Confidence, 20-26 November 2011

Equity
Malaysia equity market performed poorly as concerns over Europe’s debt crisis continued to weigh down the market confident. Although most of the corporate results were in line with market expectation but analysts started to downgrade earning due to the gloomy outlook. For the week, the FBM KLCI fell 23points or 1.6% to close at 1,454 points. The FBM KLCI outperformed the region for the 4th week as up to Thursday the index was down 1.6% against the steeper 3.5% fall by the MSCI FExJ. Average daily trading value for the week fell 24% to RM1.14 billion (RM1.5 billion previously), which was 27% below the three-month average of RM1.57 billion.

Equity Market Outlook
The bears continued to dominate the local bourses, causing the FBM KLCI to fall for its fourth consecutive week. However the market was extremely oversold and tends to have a technical rebound before the next leg kicks in. Market will remain choppy and continue to be influenced by external factors. We see immediate support at 1,400 psychological level.

Equity Market Strategy
Stock picking is still our strategy with preference for liquid fundamental stocks on weakness.


Source: ING Funds Berhad

Daily Dow Jones Shows Technicals Are On The Mend

Wall Street recap: Dow Jones surrenders earlier 101 points gains to only 33 points
The Dow Jones gained for a 2nd consecutive session amid robust November consumer confidence and optimism of further progress on a solution to Europe's fiscal mess. In Brussels, Europe’s finance ministers held an initial discussion on channeling ECB loans to cash-strapped euro nations through the IMF, aiming to insulate Spain and Italy from the debt crisis.

However, Dow Jones’ gains were reduced to 32 points from as much as 101 points intraday on profit taking following the 2.6% surge on 28 November. Sentiment was also dampened by Fitch’s downgrade its outlook on U.S. credit rating to negative, possible downgrades of France’s AAA rating outlook (by S&P) the subordinated debt of Europe 87 banks (by Moody) across 15 countries.

Daily DJIA Shows Technicals Are On The Mend
DowJones30-11-2011



Source: StockCharts.com

KLCI Has A Choppy Trend Ahead

Bursa Recap: KLCI jumps 13.2 points, but well below high of +26.5 points
Asian markets rose yesterday, spurred by overnight 2.6% surge on Dow Jones and optimism that Europe Finance ministers meetings set for later in the global trading day will bring some details of possible solutions to Europe’s debt crisis.

Tracking the regional gains, FBM KLCI jumped 13.2 points to 1444.7, substantially below its intraday high of 26.5 points as news of S&P could cut France’s AAA rating outlook within days and Moody’s possible downgrade the subordinated debt of 87 banks across 15 countries dampened sentiment.

FBM KLCI Outlook: Choppy trend ahead
We still advocate investors to capitalize on any rebounds to trim their positions or maintain a short-term trading oriented approach, given the external headwinds and volatility is likely to remain extraordinarily high.

We doubt this downtrend could reverse any time soon as KLCI struggles to crack above the immediate resistance zones at mid Bollinger band (now at 1464) and 100-d SMA (1476) levels.

If the last week’s low 1424 (November 23) is taken out, we expect the next down leg towards the 1400 psychological level and probably retesting the 76.4% FR support at 1378 points.

Daily KLCI Is Having More Upside Only If It Can Violate The 30-Days SMA
FBM KLCI 30-11-2011



Source: HLIB Research

Tuesday, November 29, 2011

Dow Jones Surges 2.6%, Snapping A 4-day Losing streak

Wall Street recap: Dow Jones surges 2.6%, snapping a 4-day losing streak
The Dow Jones leapt 291 points or 2.6% to 11523, erasing more than half of last week's 4.8% steep losses. Sentiment was lifted following robust retail sales over the Thanksgiving weekend providing a strong start to the holiday shopping season and hopes that European leaders will boost efforts to end the debt crisis.

Euro-area finance ministers meet in Brussels today as governments bid to regain the confidence of financial markets, as Germany and France were exploring radical actions of securing deeper and more rapid fiscal integration among euro zone countries, before a European Union summit on 9 December.

Daily DJIA Shows Signs Of Bottoming Up Amid Bullish Engulfing Candle And Rebound In Technicals
DowJones29-11-2011



Source: StockCharts.com

Stock to watch: DIGI (Buy on weakness)

Stock to watch: DIGI (Buy on weakness)

DIGI: Temporary base near RM3.50 levels

Following the listing of its subdivided 7.775bon shares of RM0.01 each on 24 November, DIGI prices retreated from as high as RM3.88 on 23 November to close at intraday low of RM3.54 on 25 November.

The correction from its RM3.88 high nearly reached the 38.2% FR level (RM3.50) and we think a temporary base has been formed. If prices can continue to consolidate from here, there is a good chance that DIGI may reclaim the RM3.65 (23.6% FR) and RM3.75 (upper Bollinger band) and possibly even RM3.88.

Technical indicators are still showing more weaknesses ahead but traders with higher risk appetite may BUY on weakness before stronger rebound set in.

However, cut loss if the RM3.40 level (near the 50% FR) is breached. Once this level is violated, the bears will send prices lower towards RM3.31 (30-d SMA) and RM3.27 (61.8% FR).

Daily DIGI Shows Critical Support Near Mid Bollinger Band To Prevent Further Slump
DIGI 29-11-2011



Source: HLIB Research

KLCI Outlook: Optimism Returns But Still a Trading Oriented Market

Bursa Recap: KLCI drops 16 points to record its 4th weekly declines
Major Asian markets gained on 28 Nov amid hopes that euro zone leaders would unveil fresh measures to resolve their debt crisis. However, trading volume was thin as most investors remained sidelines after the IMF denied an Italian media report
of it having talks with Italy about a bailout package worth up to €600 billion.

Ahead of the extended Awal Muharram weekend break on 28 November, KLCI dropped 16.4 points to 1431.6 on November 25. Wow, the KLCI corrected nearly 23 points for a 4th consecutive weekly losses amid persistent worries over euro crisis, the sluggish US 3rd GDP of 2%, weakening China factory output coupled with disappointing German bond auction.

FBM KLCI Outlook: Optimism returns but a still trading oriented market
Despite the overnight jump on Wall Street, we remain cautious on our market and still advocate investors to capitalize any rebounds to trim their positions or maintain a short-term trading oriented approach, given the external headwinds. We expect central banks and governments to intervene even more aggressively as credit market conditions deteriorate, and hence, volatility is likely to remain extraordinarily high.

Unless the KLCI is able to reclaim the 50% FR barrier (i.e. 1453), downside risks will remain with immediate supports at 1420 (38.2% FR) and 1400 points. Further resistance levels are 1465 (mid Bollinger band) and 1478 (100-d SMA).

Daily KLCI Is Building Its Base Near 1420 Levels
FBM KLCI 29-11-2011



Source: HLIB Research

Tuesday, November 22, 2011

Daily DJIA Is Trying To Form A Base Near 11112-11344 Levels

Wall Street recap: Dow Jones drops 54 points amid lowered 3Q11 GDP
The Dow Jnes fell as much as 113 points intraday to 11434 after 3Q GDP was revised lower to of 2% (earlier: 2.5%) and the cost of insuring French, Belgian and Spanish government debt against default leapt to records as bond yields in the region climbed.

The losses were reduced to 54 points at 11494 amid signs that the Fed may provide more stimulus in the minutes of Nov. 1-2 FOMC meeting.

Sentiment also improved following statement by Moody’s and Standard & Poor’s that there were no immediate plans to downgrade the credit rating following the failure to reach agreement on reducing the U.S. budget deficit.

DJIA outlook: Crucial short term supports near 11122-11344 levels
After briefly surpassing the 200-d SMA (now at 11967) to as high as 12284 (27 Oct), the Dow Jones plunged 6.4% to end at 11494 points yesterday.

Momentum fizzled out as investors were pessimistic of the tricky Euro debts crisis management and an uncompromised plan on the US$1.2trn debt-reduction cuts, overshadowing the gradual progresses in the recent US economic numbers.

Following the break below major supports of mid Bollinger band (11927) and 100-d SMA (11650), the Dow Jones may retest lower supports at 11344 (50% FR) and 11122 (61.8%).

As slow stochastic readings are gradually turning oversold, the Dow may be able to defend our envisaged 11122-11344 supports. More solid supports are seen at 11000 and 10847 points.

Immediate resistance levels are 11967-12284 levels.

Daily DJIA Is Trying To Form A Base Near 11112-11344 Levels
DowJones23-11-2011



Source: StockCharts.com

FBM KLCI Is Taking Cue From Overseas Markets

Bursa Recap: KLCI gains 3.9 points after falling for 5 straight days
Asian stock markets spent most of Tuesday in negative territory, weighed by US and Euro debt concerns and the deadlock by US super-committee to approve the US$1.2trn deficit plan. However, major indexes ended off their lows, led by rebounds in JCI (+1.5%), SET (+1.3%), SENSEX (+0.8%) and STI (+0.7%).

The FBM KLCI also snapped its 5-day losing streaks with a 3.9 points gain, after falling as much as 11 points to 1425 intrday.

FBM KLCI Outlook: Taking cue from overseas
We reiterate our view that investors should capitalize on rebounds to trim their positions or maintain a short-term trading oriented approach, given the start of year end school holidays and the concerns about contagion from the debt crisis in Europe. Meanwhile, the failure of the super-committee to reach a compromise on a debt-reduction plan exposes the U.S. sovereign rating to more downgrades as early as end December.

Give the break below mid Bollinger band or 20-d SMA (now at 1468), the 30-d SMA (1357) and lower Bollinger band (1439) as well as bearish technical readings, KLCI is slated to head south towards the next support at 1420 (38,2% FR) and the 1400
psychological barrier. Immediate resistance levels are 1357, 1468 and 1481 (100-d SMA).

Daily KLCI IS Downside Bias Unless Reclaims Above The 30-Days SMA
FBM KLCI 23-11-2011



Source: HLIB Research

Monday, November 21, 2011

Dow Jones Is Trying To Build A Base Near 11112 – 11344 Levels

Wall Street recap: Dow Jones tumbles 249 points amid Europe and U.S. debts woes
The Dow Jones nosedived as much as 342 points intraday to 11454 before recovering to end -249 points at 11547.

The sluggish performance was triggered after a Democratic aide said the super-committee is on the brink of failure. The Dow Jones is off 3.2% so far in Nov after a 9.5% gain in Oct and rallied as much as 18% to 12284 on 27 October from 3M low of 10404 points.

DJIA outlook: Trying to form a base near 11112-11344 levels
After briefly surpassing the 200-d SMA (now at 11970) to as high as 12284 (27 Oct), the Dow corrected 6% to end at 11547 points yesterday, but still 11% higher from recent low of 10404.

Following the breakdown of major supports of mid Bollinger band (11937 – which is also the 20-d SMA) and 100-d SMA (11660), the Dow may retest lower supports at 11344 (50% FR) and 11122 (61.8%) to form a temporary bottom. Further supports are the 11000 psychological level and 10847.

Immediate resistance levels are 11970-12284 levels.

Daily DJIA: Trying To Build A Base Near 11112 – 11344 Levels
DowJones22-11-2011



Source: StockCharts.com

Daily KLCI: Downside Risks Intensify

Bursa Recap: KLCI drops 20 points for a 5th straight loss
Regional markets slumped owing to prolonged uncertainty over how euro zone leaders would respond to mounting funding difficulties for European banks, coupled with the deadlock by U.S. super-committee to approve the US$1.2 trn deficit plan.

Sentiment was also dampened by the bearish remark and warning by Chinese Vice Premier that the global economy is heading towards a recession.

KLCI lost 20 pts at 1434, led by PBBANK (-14 sen to RM12.54), TENAGA (-12 sen to RM5.53), MISC (-24 sen to RM6.45), GAM (-15 sen to RM3.11) and MAYBANK (-5 sen to RM8.25).

FBM KLCI Outlook: Downside risks intensify
We reiterate that more profit taking consolidation are expected this week, given the start of year end school holidays, the contagion debt crisis in Europe and the U.S. debt ceiling resolution on 23 November.

Moreover, given the breakdown of mid Bollinger band (now at 1468 – which is also the 20-d SMA), Nov’s low of 1452 points, the 50-d SMA as well as bearish technical readings, KLCI is expected to head south towards the next support at 1420 (38,2%
FR) and the 1400 psychological barrier. Immediate resistance levels are 1468 and 1483 (100-d SMA).

Daily KLCI: Downside Risks Intensify
FBM KLCI 22-11-2011



Source: HLeBroking

Tuesday, November 15, 2011

Daily DJIA: To Trade Range Bound Within 30-Days SMA And Upper Bollinger Band

Wall Street recap: Dow Jones down 74 points on profit taking
After recoding a 2.2% gain last Friday, the Dow Jones closed down 74 points to 12079, off intraday low of 12027. The index was down as much as 126 points amid weakening euro and Italy’s borrowing costs which surged to 6.29% at an auction, deepening concerns that Europe will struggle to contain its debt crisis.

Sentiment was also dampened by German Finance Minister’s comment that Europe’s permanent bailout fund may not be implemented before 2013 and German Chancellor’s party voted to offer euro states a way to leave the currency area, signaling a first step towards the foundation of a two-speed Europe—a region with and without the euro currency.

Daily DJIA: To Trade Range Bound Within 30-Days SMA And Upper Bollinger Band
DowJones15-11-2011



Source: StockCharts.com

MayBank: Solid And Strong Performance

15 November 2011
Price Target: RM8.87
Share price: RM8.25


Results
# 1Q12/11 net profit of RM1,286.4m (+11.4% qoq; +25.1% yoy) was slightly above HLIB (26.7% of annualized full year forecast) and consensus (26.6%) forecasts. However, given guidance of higher credit charge ahead, we considered the results to be in line with HLIB and consensus.

Deviations
Largely in line.

Dividend
None.

Highlights
# 1QFY12/11 earnings were boosted by lower provisions while all business segments and main markets recorded improved performances. Only blemish was WOM Finance
(under BII) and An Bihn Bank which recorded lower profits but contributions were insignificant.

# Loans growth continued to be strong and ahead of 12% KPI with yoy domestic growth exceeding industry average. Deposits growth also strong and slightly ahead of 14% KPI.

# Despite external headwinds, the group is confident about domestic demand and achieving its FY12/11 16% ROE KPI.

# NIM pressure higher in Indonesia as magnitude of erosion in Malaysia reducing while Singapore is focusing on profitable loan segments.

# Credit charge of 30bps more sustainable level over longer term vis-à-vis 15bps (annualized) in 1QFY12/11.

# Asset quality ratios improved. Although there was increase in absolute IL (mainly from WOM Finance), overall asset quality is intact and maintainable.

# Exposure to EU and UK is only RM2.2bn (0.4% of total assets) and mostly in AFS securities (with MTM loss of RM48m charged to reserves).

# Comfortable with its capital ratios (which should support 12% annual growth) and proforma BASEL III core equity ratio of circa 8%, unless BNM sets a more stringent ratio.

Risks
Unexpected jump in impaired loans, lower than expected loan growth and significant slowdown in capital market activities.

Forecasts
Unchanged.

Rating - BUY
Positives
Earnings growth from Indonesia while domestic operations also improving, new business divisions to better address competitive pressure and focus on customer centric. DRP provides downside protection.

Negatives
Have not entirely mitigated the dilution impact from debt raising and cash call.

Valuation
Target price unchanged at RM8.87 based on Gordon Growth with ROE of 15.1% and WACC of 10.2%.



Source: HLIB Research

Monday, November 14, 2011

KLCI Learn To Leave With Volatility

Bursa Recap: KLCI up 10 points in line with bullish regional markets
Tracking Dow Jones’ last Friday 2.2% surge, Asian markets closed on a bullish note, led by strong gains in TWSE (2.2%), KOSPI (2.1%) and HSI (1.9%) on hopes that new leaders in Italy and Greece will take decisive action to save their indebted nations from bankruptcy and pushing through reforms and austerity plans to restore their countries' tattered credibility.

On the back of bullish regional markets, FBM KLCI jumped 10.1 points to 1478.9. Daily traded volume ballooned 38% to 2.85 billion shares, the highest since 8 February 10, as ACE Market and penny stocks surged due to strong retail participation.

FBM KLCI Outlook: Learn to leave with volatility
While economic numbers indicate that things are slowly getting better, fundamentals are being ridden by lack of direction in the euro zone. Given the headwinds in Europe, we have to learn to live with the volatility in the near term. Technically, daily trend and momentum indicators are weakening and are pointing to more consolidations. Immediate resistance levels remain at 100-d SMA (now at 1489) and 200-d SMA (1508).

However, more positive readings on the weekly slow Stochastics and MACD should support further upside in the medium term. Thus, any downside consolidation will be well-supported by 1452 points (3 November intraday low) and 30-d SMA (1442 points).

Daily KLCI: More Downside If The Mid Bollinger Band Is Violated
FBM KLCI 15-11-2011



Source: HLIB Research

Sunday, November 13, 2011

Dow Jones Up 260 Points On Positive Vibes In Europe Debt Deals

Wall Street recap: Dow Jones up 260 points on positive vibes in Europe debt deals
The Dow Jones surged 260 points last Friday to record a 1.4% weekly gain, after a better-than-expected Nov consumer report. Sentiment was also boosted as Italy and Greece moved closer to getting their financial crises under control.

Italy's benchmark stock index leapt 3.7% and its borrowing costs plunged after the country's Senate passed a crucial austerity budget demanded by the European Union. The yield on Italy's benchmark two-year bond dropped 0.43% to 5.69% from as high as 7.13% last week.

Daily DJIA: Likely To Trade Range Bound Within 30-Days SMA And Upper Bollinger Band
DowJones14-11-2011

Weekly DJIA: Upside Remains Intact Amid Positive Technicals
DowJones14-11-2011a



Source: StockCharts.com

KLCI Is Going For Range Bound Trading

Bursa Recap: KLCI drops 3.9 points last Friday to record -0.6% wow
Tracking the mixed regional markets, FBM KLCI eased 3.9 points last Friday to 1468.8. WoW, KLCI declined 0.6%, its 2nd consecutive losses amid external woes that the contagion from the European sovereign debt crisis could spread from Greece to Italy, and possibly later to Spain (gross external debt/GDP of 153% in 2010).

Average daily traded volume and value jumped 41% and 5% to 2.3 billion shares worth RM1.5 billion respectively, as ACE Market and penny stocks surged due to strong retail participation.

FBM KLCI Outlook: More range bound trading this week
Markets seem to be pleased in moving away from two big uncertainties, following the formation of interim Governments in Greece and Italy can start working on agreed austerity measures that could pacify investors and stabilize the financial markets.

Moreover, the statement by Datuk Seri Najib Tun Razak on 11 November that the general election would not be held this year put an end to weeks of speculation.

Technically, daily trend and momentum indicators are pointing to more consolidations as the KLCI fell below the 10-d SMA (now at 1477 points) and is unable to break the 100-d SMA (now at 1489) and 1500 psychological levels over the last two weeks. However, more positive readings on the weekly slow Stochastics and MACD should support further upside in the medium term. Thus, any downside consolidation will be mild and well-supported by recent November’s low of 1452 points and 30-d SMA (1439 points).

Daily KLCI: A Breakdown Below Mid Bollinger Band Will Drive KLCI Lower To 30-Days SMA
FBM KLCI 14-11-2011

Weekly KLCI: Signs Of Consolidation As Index Falls Below Mid Bollinger Band
FBM KLCI 14-11-2011a



Source: HLIB Research

Friday, November 11, 2011

DJIA Outlook: Crucial Neckline Support Near 11600

Wall Street recap: Dow Jones recovers 113 points after 389-point selldown on 9 November
After plunging 389 points on 9 November, Dow Jones rebounded 113 points to 11894, following better-than-expected jobless claims while a retreat in Italian bond yields and the selection of a new Greek premier tempered concern about Europe’s debt crisis.

Italian government bonds rose after the ECB was said to purchase the securities and the nation sold the maximum amount of one-year bills on offer at an auction. Meanwhile, a statement from S&P affirming France’s rating and saying that a “technical error” was to blame for an earlier message suggesting a downgrade also lifted equities.

DJIA outlook: Crucial neckline support near 11.6k
Dow Jones’ technical outlook also deteriorated lately following the massive plunge of 389-point on 9 November.

Immediate resistance levels are 200-d SMA (now at 11975) and upper Bollinger band (12308).

For supports, it is crucial for the Dow to defend the neckline support near 11600. A breakdown below this level will trigger more selldown towards 50-d SMA (11439) and lower Bollinger band (11371).

Daily DJIA: Crucial Neckline Support To Prevent Further Selldown Towards 11000
DowJones11-11-2011



Source: StockCharts.com

Thursday, November 10, 2011

FBM KLCI Is Having A Weakening Technical Readings

Bursa Recap: KLCI tumbles 17 points in line with sluggish regional marts
Asian markets tumbled amid concerns of China’s economic slowdown on slowing exports and soaring Italian bond yield that could trigger mounting debt crisis in Europe and eventually breaking up the Euro.

Tracking the sluggish sentiment, FBM KLCI slid 16.99 points to 1472.7, due to the heavy losses by GENTING (-32 sen to RM10.68), IOICORP (-12 sen to RM5.05), CIMB (-10 sen to RM7.26), TENAGA (-13 sen to RM5.79) and AXIATA (-6 sen to RM4.90).

FBM KLCI Outlook: Formidable resistance near 100-d & 200-d SMAs
We reiterate our view that in the wake of external wild swings driven by headlines, investors should SELL INTO RALLY or trim their positions.

Technical outlook has weakened as KLCI was unable to break the stiff resistance zones at 100-d (now 1490) and 200-d (1509) SMAs, as well as falling below the immediate support of 10-d SMA (1477). Further breakdowm below mid Bollinger band (1461) means that the current rally is likely to be disrupted, spurring more selldown towards 30-d SMA (1436) points.

Daily KLCI: A Breakdown Below Mid Bollinger Band Will Drive KLCI Lower To 30-Days SMA.
FBM KLCI 11-11-2011


Source: HLIB Research

Wednesday, November 9, 2011

KLCI: Wild Swings Ahead On Worsening External Backdrops

Bursa Recap: KLCI jumps 9.2 points amid regional gains
Tracking positive regional markets gains, the FBM KLCI jumped 9.2 points to 1489.6, driven by selected index-linked counters i.e. AXIATA (+13 sen to RM4.96), SIME (+12 sen to RM8.92), GENTING (+14 sen to RM11.00), PETCHEM (+7 sen to RM6.48) and CIMB (+4 sen to RM7.36).

News of Italian Prime Minister Silvio Berlusconi's impending resignation lifted confidence that a new leader would act more effectively to tackle the country's debt woes. Trading volume and value soared 48% and 18% to 2.68 billion shares worth RM1.82 billion, focusing mainly on penny stocks and lower liners.

FBM KLCI Outlook:Formidable resistance near 100-d & 200-d SMAs
In the wake of external wild swings driven by headlines, we reiterate our SELL INTO RALLY recommendation towards stiff resistance zones at 100-d (now at 1491) and 200-d (1510) SMAs. Immediate supports are 10-d SMA (1475) and mid Bollinger band (1458). A breakdown below 1458 will mean that the current rally is likely to be disrupted, spurring more selldown towards 50-d SMA (1434) and lower Bollinger band (1422) points.

Daily KLCI: A Breakdown Below Mid Bollinger Band Will Drive KLCI Lower To 30-Days SMA
FBM KLCI 10-11-2011


Source: HLIB Research

Genting Malaysia: More Surprises Ahead?

10 November 2011
Price Target: RM4.07
Share Price: RM3.86


Highlights
# GenM’s US operations, Resorts World New York (RWNY) recorded a surprising net wins of US$651/VLT/day on its first day of business on 28th October 2011.

# Monticello Casino & Raceway appeared to be the most suffered video gaming operator in terms of net wins (18% declined in net wins/VLT/day) on the same week RWNY was
launched.

# Its closest competitor, Empire City Casino (ECC) showed a 14% fall in its net wins, from US$310 to US$/VLT/day. For the remaining seven video gaming operators, their net wins movements vary within the range of ±6%.

# On the following week, RWNY recorded an average net wins of US$629/VLT/day (-3% wow), while the net wins of other operators climbed back up.

Comments
# The robust net wins/VLT/day implies significant potential upside, as it is 117% above our conservative assumption of US$300 per VLT per day.

# We observed that despite some cannibalization, RWNY actually enlarged the overall market size as state wide’s net wins improved 23% after the inclusion of RWNY.

# We will continue to closely monitor RWNY’s net wins as the positive surprise might be due to novelty effect. We remained optimistic with RWNY’s performance given the potential upside from our conservative assumption.

# If the net wins are able to maintain at current level, there is 12% and 7.4% potential upside to our earnings forecasts and SOP based target price respectively. Recall that ECC only recorded a net win of US$311/VLT/day during its first week of
operation in Oct 2006. This underpins our view that RWNY has the potential of overtaking ECC as the market leader.

Catalysts
# International operations to help boost GenM’s future earnings.

# Better-than-expected performance from GenUK.

# Approval of Florida’s destination resort legislation.

Risks
1) Regulatory risk;
2) Weaker hold percentage;
3) Pandemic breakouts;
4) Cannibalization from Macau & Singapore;
5) Appreciation of RM; and
6) Destination resort legislation not approved by Florida Legislature.

Forecasts
Unchanged, pending more data points on RWNY’s net wins.

Rating - BUY, Target Price: RM4.07
Positives
(1) Defensive stock;
(2) Monopoly in the industry; and
(3) New source of earnings from international markets to drive earnings growth.

Negatives
(1) Highly regulated industry; and
(2) earnings highly dependable on luck factor and hold percentage.

Valuation
Maintain BUY with target price of RM4.07 based on SOP.



Source: HLIB Research

IOI Corporation: Resolves Land Deal Termination Issue

November 10, 2011
Price Target: RM4.57
Share Price: RM5.17


News
# Both IOI and DutaLand have agreed to revoke the sale and purchase agreement (SPA) to acquire 11,977.9ha of oil palm plantation land in Sabah for RM830m.

# OSK Trustees Bhd (the stakeholder jointly appointed by both parties) will refund IOI both the deposit (RM83m, equivalent to 10% of the purchase price) together with the interest accrued.

# Recall, IOI had on 28 Jul 11 proposed to acquire 11,977.9ha of oil palm plantation land (consisting of 5 estates that are planted with oil palm) in Labuk and Sugut, Sabah for RM830m. Subsequently, IOI has on 26 Oct 2011 issued a notice to Pertama Land & Development Sdn Bhd (a unit of DutaLand Bhd) to terminate the SPA due to “noncompliance of certain terms and conditions which had been communicated to Pertama Land”.

Financial impact
None, as we did not reflect the potential interest income forgone from the potential loss of deposit (albeit immaterial, as this would only reduce IOI’s FY06/12 net profit by 0.1%). Also, we did not factor in the potential contribution from the this oil palm plantation land.

Pros / Cons
Positive, as the dispute between IOI and DutaLand has now come to an end, and IOI will not lose the 10% deposit.

Risks
Downside risks:
(1) Global vegetable oil (including CPO) production comes in higher than expected, resulting in lower-than-expected CPO prices;
(2) Demand rationing by certain oil consuming countries (such as India) when vegetable oil prices skyrocket to certain level; and
(3) Recent developments may give rise to reputation risk.

Forecasts
Maintained.

Rating - HOLD
Negatives
Perception to reputational risk (arising from the RSPO suspension) that would result in valuation multiple compression.

Positives
Strong balance sheet.

Valuation
SOP-derived Target Price maintained at RM4.57, and our Hold recommendation for IOI maintained.


Source: HLIB Research

Friday, November 4, 2011

DJIA Outlook: Stiff Resistance At 12300-12500

Wall Street recap: Dow Jones surges 209 points to 12045, above its 200-d SMA
The Dow Jones jumped 209 points, near its intraday high as investors were encouraged by Greek Prime Minister's move to back down from a national referendum on the country's bailout package and lower weekly jobless claims, offsetting a slower October’s ISM service index.

Sentiment was also boosted by the ECB’s surprised 25bps cut in its benchmark interest rate to 1.25% to revive stalling growth as the euro zone could see "slow growth heading towards a mild recession" by end 2011.

DJIA Outlook: Stiff resistance at 12300-12500
Sentiment has turned slightly better following Dow Jones' resilience to defend above the neckline support near 11600 as a breakdown below this head & shoulder support will trigger more selldown towards lower Bollinger band of 11128 and 11k psychological level.

Nevertheless, given the increasingly overbought technical readings, the Dow Jones could face stiff resistance near 12500 and upper Bollinger band (12567).

Daily DJIA: Facing Stiff Resistance Near Upper Bollinger Band And 12500 Levels
DowJones04-11-2011

Weekly DJIA: Heading Towards Its !st Fall After Rising 5th Straight Weeks Amid Hanging Man Formation
DowJones04-11-2011a



Source: HLIB Research

KLCI: Cautious Ahead of Long Holiday Weekend

Bursa Recap KLCI falls 8.6 points, recovered from -18 points intraday
Asian markets fell as chaos over Greece's role in the euro zone battered investors’ sentiment. Fallout from Greece’s bailout scheme could lead to a disorderly default, affecting European banks that could ripple across the global financial system.

FBM KLCI also lost 8.6 points to 1462.4, its 3rd consecutive loss and lowest close since October 25. Turnover rose 12% to 1.76bn shares but total value tumbled 33% to RM1.14bn given the focus mainly on lower liners and penny stocks. Market breadth was bearish with 524 losers and 226 gainers.

FBM KLCI Outlook: Cautious ahead of long holiday weekend
The local bourse showed some resilience over the last two trading days as it managed to mitigate huge intraday losses to close moderately lower on selective blue chips bargain hunting towards closing.

Although sentiment will likely improve today following overnight Dow Jones' gains and Greece backing down on a national referendum, FBM KLCI’s near term outlook remains cautious given the long holiday weekend as Bursa Malaysia will be closed on Monday for Hari Raya Haji,

Unless the index closes above the uptrend channel, KLCI will continue its range bound consolidation with 30-day (now at 1420) and 50-d SMAs (1437) acting as immediate supports. Immediate resistance zones are 38.2% FR (at 1487), 1493 (last
week’s high) and 1500 psychological levels.

Daily KLCI: More Consolidations Ahead Amid Weakening Technicals And A Breakdown In Uptrend Channel
FBM KLCI 04-11-2011


Source: HLIB Research

Friday, October 28, 2011

Global Market Weekly Review, 16 - 22 October 2011

Germany said European Union leaders will not provide the complete fix to the Euro area debt crisis that global policy makers are pushing for at an October 23 summit. German Chancellor Angela Merkel has made it clear that “dreams that are taking hold again now that with this package everything will be solved and everything will be over on Monday won’t be able to be fulfilled,” Steffen Seibert, Merkel’s chief spokesman, said. The search for an end to the crisis “surely extends well into next year.” Group of 20 finance ministers and central bankers concluded weekend talks in Paris endorsing parts of Europe’s emerging plan to avoid a Greek default, bolster banks and curb contagion, setting the October 23 meeting of European leaders in Brussels as the deadline.

Brazil’s central bank cut borrowing costs by half a point for a second straight meeting, as growth in Latin America’s biggest economy slows amid Europe’s sovereign-debt crisis. The bank’s board, led by President Alexandre Tombini, voted unanimously to reduce the benchmark Selic rate to 11.5% from 12%, as forecast by 61 of 68 analysts in a survey. Five analysts forecast a 0.75-point reduction, and two expected a full-point cut.

Thailand kept interest rates unchanged for the first time this year, ending its longest series of increases since 2006, as the nation’s worst floods in five decades and a weakening global economy crimped growth. The Bank of Thailand kept its benchmark one-day bond repurchase rate at 3.5%, a decision predicted by 16 of 17 economists in a survey.



Source: ING Funds Berhad

Malaysia Fixed Income Market Review, 16 - 22 October 2011

Fixed Income
The Malaysian Government Securities (MGS) market was lackluster during the week under review due to lack of fresh drivers and hence, benchmark yields were range-bound. The 5- and 7-year benchmark MGS yields climbed 3 basis points (bps) and 1 bp weekon-week (WoW) respectively to 3.35% and 3.52%. The 3-year MGS yield was traded the most amongst the benchmark and remained unchanged at 3.15%. The 10-year MGS yield also remained stable at 3.71%.

On local economic front, the Consumer Price Index (CPI) surprisingly rose at a faster pace of 3.4% year-on-year (YoY) in September 2011, from 3.3% in August 2011. This was due to a faster increase in food and transportation costs, whilst a weakening ringgit of about 7% against the dollar in September caused import costs to be higher. In addition, Leading Index (LI) moderated to 1.1% YoY in August 2011, from 1.9% in June and July 2011, pointing to weaker economic activities ahead.

For Private Debt Securities (PDS) market, trading interest continued to focus on AAA- and AA- segments, which are mainly banks, plantation and power sectors as well as quasi-government entities.

Fixed Income Outlook
Amid ongoing debates and speculations on final outcome of the Eurozone debt crisis, local economic data continued to point to moderating growth prospect despite the recent higher than expected inflation numbers. We maintain our view that Bank Negara Malaysia (BNM) will likely keep interest rates unchanged in the last monetary policy meeting in November this year.

Following the announcement of target budget deficit of 4.7% and Gross Domestic Product (GDP) forecast of 5-6% in 2012, market does not seem to be too excited over the seemingly optimistic growth number forecast. Reaction in the bond market was muted despite the improving deficit numbers. We expect government market to continue to be range-bound while market awaits release of the government bond auction calendar for 2012 to gauge the term structure of the government bonds. Meanwhile, news from the Eurozone and the US data will continue to influence the local currency as well as local bond market direction.

For credit market, there have been a couple of sizeable new issuances coming to the market recently. Despite all uncertainties clouding the global financial market, these high-grade issuances received strong response from the local market. We reckon this is due to high liquidity in the market, on top of yield requirement. We expect the corporate bond market to continue to be resilient while we acknowledge that valuation is stretched. In addition, we do not discount potential risk-aversion triggered by more adverse news on the economic growth prospects.

Fixed Income Strategy
We have revised our duration call to slightly overweight from neutral duration across all Fixed Income. In terms of asset allocation, focus remains on corporate bonds. We aim to participate in new issuances for further diversification and yield enhancement.




Source for MGS levels: Bond Pricing Agency
Source: ING Funds Berhad

FBM KLCI Eased 3.6% on Profit Taking, 16-22 October 2011

Equity
The pullback last week was widely expected as the index had risen substantially for the last three weeks. We conclude that the market has found the immediate bottom at 1,330 points and we believe the market will continue to consolidate before staging another rebound as both the Moving Average Convergence Divergence (MACD) and signal lines are crossing over into the positive region. In other words, the buying momentum is still intact with minimum downside risk. For the week, the market fell 3.6 points or 0.25% to close at 1,438.83 points.

Equity Market Outlook
In the short term, the index should resume its uptrend towards the resistance of 1,453 – 1,473 points. The market needs positive catalysts to move above the resistance trend lines and if that happens, we might see the index crossing 1,500 points, a key psychological level. In order to capitalize on the uptrend, we see construction, banks, plantation and property as the best proxies.

On the downside, the market is well supported at 1,420 points which is the 50-day Smooth Moving Average (SMA).

Equity Market Strategy
Stock picking is still our strategy with preference for liquid fundamental stocks on weakness.


Source: ING Funds Berhad

Daily DJIA Having More upside Following The 200-Days SMA Breakout And Bullish Technicals

Wall Street recap: Dow Jones surges 340 points to 12209 on positive EU debt deals
Tracking the buoyant gains in the Asian and Europe markets, Dow soared 340 pts or 2.9% at 12209, its highest close since July 28. US Treasuries and dollar slid while commodities jumped as investors cheered a marathon EU summit meeting that hammered out a commitment by banks and other private bondholders to accept a voluntary 50% writedown on Greek government debt, a boost in the lending power of the European Financial Stability Fund (EFSF) to 1.0trn euro and a 106bn euro recapitalization of European banks.

Sentiment was also boosted by a stronger 3Q11 GDP of 2.5% (2Q11: 1.3%).

Daily DJIA Having More upside Following The 200-Days SMA Breakout And Bullish Technicals
DowJones28-10-2011

Weekly DJIA Is Marching Towards Upper Bollinger Band Amid Bullish Technicals
DowJones28-10-2011a



Source: StockCharts.com

Thursday, October 27, 2011

KLCI Outlook: Enjoy The Ride Toward 1500-1513 Points

Bursa Recap KLCI up 13 points to 1471, the highest since 2 September
Asian markets jumped after EU leaders agreed to boost the region's rescue fund and struck a deal on a 50% writedown for private bondholders on their Greek debt.

Tracking the regional uptrend, FBM KLCI rose 13.1 points to 1470.9, the highest since 2 Sep, led by GENTING (+31 sen to RM10.30), IOICORP (+16 sen to RM5.26), PBBANK (+14 sen to RM12.62), GAM (+20 sen to RM3.37) and PETCHEM (+12 sen to RM6.31). Trading volume increased to 1.88bn shares worth RM2.4bn against Tuesday’s 951m shares worth RM1.08bn.

FBM KLCI Outlook: Enjoy the ride toward 1500-1513 points
Riding on the overnight bullish Wall St and Europe markets, FBM KLCI is expected to continue its uptrend towards 1500 psychological barrier and probably to retest the 200-d SMA (now at 1513) after a mild profit taking consolidation.

As the EU debt deal is perceived as offering more of a breathing space that gives policy makers a window of opportunity to put its house in order but it lacks any strategy to boost growth in the euro zone, where countries have been encouraged to emphasize austerity in an effort to bring down debt levels. Hence, if the euro-zone economy weakens materially, the debt dynamics will get worse and could throw the program off course.

Immediate resistance is upper Bollinger band (now at 1487), followed by 1496 (100-d SMA) and 1500 levels whilst immediate supports are 10-d SMA (1450) and 50-d SMA (1435) points.

Daily KLCI Is Towards The Upper Channel
FBM KLCI 28-10-2011



Source: HLeBroking

DJIA: Upside Target Near 12292

Wall Street recap: Dow Jones up 162 points on news of China’s investment in EFSF
The Dow Jones rose more than 160 points in the early session following better-than-expected Sept durable goods orders and new home sales, approval by German lawmakers of leveraging the euro zone's emergency bailout fund coupled with Boeing results.

However, the index slipped to negative territory in the afternoon amid uncertainty about the outcome of a key meeting among European leaders until positive news that China would invest in European Financial Stability Facility (EFSF) drove the Dow Jones 162 points higher to close at 11869.

Daily DJIA: Upside Target Near 12292 Amid Bullish Breakout From The Box
DowJones27-10-2011



Source: StockCharts.com

Wednesday, October 26, 2011

IOI Corporation: Terminates RM830 Millions Land Deal

October 27, 2011
Price Target: RM4.57
Share Price: RM5.10


News
# IOI issued a notice to Pertama Land & Development Sdn Bhd (a unit of DutaLand Bhd) to terminate the sale and purchase agreement (SPA) to acquire 11,977.9ha of oil palm plantation land in Sabah for RM830m, due to “noncompliance of certain terms and conditions which had been communicated to Pertama Land”.

# According to IOI’s announcement, OSK Trustees Bhd (the stakeholder of DutaLand Bhd) will have to refund IOI the RM83m deposit (10% of the purchase price) and interest accrued.

# However, DutaLand, on the other hand, said it does not accept IOI’s reasons for termination of the SPA, and it has notified OSK Trustees not to remit the deposit paid by IOI.

# Recall, IOI had on 28 Jul 11 proposed to acquire 11,977.9ha of oil palm plantation land (consisting of 5 estates that are planted with oil palm) in Labuk and Sugut, Sabah for RM830m.

Financial impact
Worst case scenario, assuming IOI’s 10% down payment is not refundable, it would reduce IOI’s FY06/12 net profit by 3.5% to RM2,285.8m. However, it is still premature to determine if IOI will lose its deposit given the absence of further details in the announcement.

Pros / Cons
# We are slightly negative on the latest development, as we had earlier expected the acquisition to improve IOI’s FFB yield and output growth over the longer term.

# Also, we note that this is the second time IOI walking away from such deal (first time being IOI aborted plan to acquire Menara Citibank in Nov 2008) and this may hurt its share price sentiment arising from the potential loss of deposit.

Risks
Downside risks
(1) Global vegetable oil (including CPO) production comes in higher than expected, resulting in lower-than-expected CPO prices;
(2) Demand rationing by certain oil consuming countries (such as India) when
vegetable oil prices skyrocket to certain level; and
(3) Recent developments may give rise to reputation risk.

Forecasts
Maintained for now, pending further update from management.

Rating - HOLD
Negatives
Perception to reputational risk (arising from the RSPO suspension) that would result in valuation multiple compression.

Positives
Strong balance sheet.

Valuation
Target Price (based on SOP) maintained at RM4.57 for now, and our Hold recommendation for IOI maintained.



Source: HLIB Research

CPO Price: Poised For A Further Breakout

Commodity to watch – CPO

CPO price: Poised for a further breakout

IOI’s chairman Tan Sri Lee said CPO prices are expected to rise above RM3000/MT in the next three months due to the drop in production amid increasing overseas demand. He added that the rainy season coupled with a labour shortage is expected to derail production of fresh fruit bunches in the medium term in the wake of increasing demand from China, India and Pakistan.

To recap, CPO prices jumped 2.1% to RM2951/MT on 25 Oct and had rebounded 6.5% from 52-wk low of RM2771 on 7 Oct.

After surpassing its 30-d SMA and a breakout of the downtrend line (DTL) from 52-wk high, near term CPO outlook has turned better amid strengthening weekly and daily technical readings.

Immediate upside resistance targets are RM3040 (23.6% FR) and RM3217 (38.2% FR) while stiffer resistance is situated near 50% FR at RM3362. Immediate supports are mid Bollinger band (now at RM2856) and lower Bollinger band of RM2763 levels.

Daily COP: Poised To Retest RM3040-RM3217 Upside Resistance Amid A DTL Breakout
CPO 27-10-2011

Weekly CPO: To Stage A Breakout Above The Uptrend Line Support Amid Bullish Technicals
CPO 27-10-2011a



Source: HLIB Research

FBM KLCI: More consolidation ahead

Bursa Recap KLCI up 7.8 points to 1458, the highest since 9 September
Asian markets wavered amid overnight Wall Street losses following a decline in Oct consumer confidence and ahead of the crucial 2nd EU summit on 26 October.

However, sentiment improved as Chinese Premier Wen Jiabao said China should "fine tune" its policy at an appropriate time, which investors took to mean monetary policy could become more accommodative.

Bursa Malaysia was closed yesterday due to Deepavali holiday. On 25 Oct, the FBM KLCI jumped 7.8 pts to 1457.8, spurred by late fund buying of selected key blue chips. Despite the positive gains, market breadth was negative ahead of a crucial
announcement on how Europe plans to stem its debt crisis.

FBM KLCI Outlook: More consolidation ahead
While awaiting a more detailed resolutions by Euro finance ministers in Nov (after failing to finalize a master plan yesterday), overnight gains on Dow and news that China will buy bonds issued by the EFSF should bode well for broader markets.

Maintain SELL INTO RALLY or TAKE PROFITS near our envisaged resistance targets of upper Bollinger band (now at 1478 pts) and 100-d SMA (at 1497). Immediate pullback supports are 1436 (50-d SMA), 1410 (30-d SMA) and the 1400 psychological levels.


Daily KLCI: Facing Stiff REsistance Near Upper Bollinger Band And 100-Days SMA
FBM KLCI 27-10-2011



Source: HLIB Research

Friday, October 21, 2011

Daily Dow Jones: Consolidating Within The Upper And Mid Bollinger Bands.

Wall Street recap: Dow Jones gains 37 points in volatile trading
The Dow Jones was on a rollercoaster ride throughout the session as investors struggled to digest and react to a raft of headlines from the euro zone ahead of the upcoming EU summit on 23 October.

In the most recent development, Germany's Merkel and France's Sarkozy said euro zone leaders will approve a plan by 26 October at the latest, as they gear up to hold talks ahead of Sunday's meeting. Meanwhile, a better-than-expected Oct Philadelphia manufacturing index helped lift sentiment.

Daily Dow Jones: Consolidating Within The Upper And Mid Bollinger Bands
DowJones21-10-2011



Source: StockCharts.com

KLCI Focus On The EU Summit Outcome Over The Weekend

Bursa Recap: KLCI dropped 9.1 points, recovered from low of -21 points
Asian markets were lower on concern about slowing economic growth in China as well as divisions among European leaders over the EU’s weekend summit that could derail real progress in keeping the euro zone debt crisis in check.

Tracking regional fears, FBM KLCI tumbled as much as 21 points intraday before paring down its losses to 9.1 points at 1441.2. Lagging movers were AXIATA (-12 sen to RM4.73), GENTING (-12 sen to RM10.00), SIME (-7 sen to RM8.58), PETCHEM (-8 sen to RM6.04) and CIMB (-4 sen to RM7.19).

FBM KLCI Outlook: KLCI: Focus on EU Summit
Global markets that are tethered to hopes for a European debt crisis solution is likely to remain volatile and confused in the immediate term, depending on the outcome from the upcoming EU discussions from 23-26 Oct and a later one from G20 on 3-4 Nov. The consensus view is now that it could take months or more for the situation to get resolved.

Moreover, with the FBM KLCI broken below the uptrend line (formed since late Sep 11), we continue to advocate risk-averse investors to sell into strength or trim positions. Resistance zones are 1470 (15-w SMA) and 1495 (20-w SMA). Immediate
supports for pullbacks are 1432 (10-d SMA), 1411 (30-d SMA) and the 1400 psychological levels.

Daily KLCI: A Fall Below Uptrend Channel Will Spur Index Lower Near Mid Bollinger Band
FBM KLCI 21-10-2011



Source: HLIB Research
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