Wednesday, August 24, 2011

Malaysian Equity Continued to Outperform the Region, 14 - 20 August 2011 Review

Equity
The FBMKLCI rebounded at the beginning of the week, moving steadily above the 1,500 point psychological barrier before giving up all the gains on Friday due to the steep ~5% fall on Wall Street on Thursday. Analysts downgraded global growth due to fears of another double dip recession. Regional markets performed badly with MSCI Asia Ex Japan plummeting 2.8% week on week. Malaysia equity continued to outperform the region as the FBMKLCI was only down 1.3%. Average daily trading value for the week fell 38% to RM1.84 billion but still above the three month average of RM1.81 billion.

Equity Market Outlook
We believe domestic equity will continue to be under selling pressures which is in line with the regional movement. As the crisis is far from over, we see more downside risk at the moment but this risk will be mitigated by strong corporate results release in the coming week. And without any sharp falls on Wall Street, the Asian market should recover and buck the consolidation trend in European and US market. Technically, the market failed to convince the bull. The recent buying momentum was hammered by another round of massive sell down. This kept the price trend below the 200 SMA. We see the support at 1,460 points.

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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