Wednesday, May 25, 2011

FBM KLCI Investors Remain Cautious Amid Uncertainties, 15 May – 21 May 2011 Review

Global equities market swung between gains and losses throughout the week. Trading ranges was tight as the market trapped within consolidation mode. Investors remain cautious as there are still a lot of uncertainties in the economy. Furthermore, the sharp decreases in commodities prices accelerated the selling as investors further reduce riskier assets.

On the local equities market, the FBM KLCI recovered back to its 20-day simple moving average (SMA) which was situated at 1,540 points. The buying momentum turned positive immediately after the index cross above the 20-day SMA. Trading activities concentrated in the second and third liner sent the FBM 70 to an all time high. The FBM KLCI outperformed the MSCI Asia ex-Japan which dropped 0.58%. Average daily value was lower week-on-week (WoW) but still above its three month average of RM1.76 billion.

Results released during the week were mostly within expectation. We will see more results announcement in the coming week, and expect some potential earning revision for plantation sector.

Equity Market Outlook
The market staged a technical rebound after enduring massive selling for the past few weeks. The recovery was sharp and the momentum is there which prompted us to believe the market could make a comeback to reclaim back the previous high. We see banks and plantations as the index movers for the coming week. Technically, the index was in recovery mode. However, the index might face some selling pressure as regional markets remain volatile. We need to see some stability in external markets in order to enable local investors to regain confidence in equities. As long as the Dow Jones continues to consolidate above 12,500 points, the long-term uptrend for global markets remains intact.

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

Source: ING Funds Berhad

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