Tuesday, October 18, 2011

Local Bourse Rebound in Tandem with Regional Markets, 9 - 15 October 2011

Equity
The local equity market recovered strongly as the external environment showed tremendous improvement. The prices trend also took out the 30-day smooth moving average (SMA) and hovering around the 50-day SMA. Cyclical sectors such as construction, property and oil and gas enjoyed a strong rebound. For the week, the FBM KCLI jumped 42 points or 3% to close at 1,442 points. The FBM KLCI, however, underperformed the region as the MSCI Asia ex-Japan Index managed to rally 5.4%. Average daily trading value for the week edged up 2% to RM1.35 billion (RM1.32 billion previously), which was 27% below the three-month average of RM1.84 billion.

Equity Market Outlook
The FBM KLCI managed to recover approximately 50% of its losses from its peak and through level. As such, we see there might besome profit taking activities this week. However, second liner should continue its rally as long as the regional market remains stable asinvestors search for laggards. If the 1,500 points is breaches, then the 61.8% FR level at 1,480 will be its next immediate resistance.

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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