Wednesday, January 18, 2012

Markets Rebound, 9-13 January 2012

Equity
Equities rallied back nicely last week, help by improving economy outlook. MSCI World Index rebounded to 9 week high, climbing as much as 3 percent. Analysts speculate that the rise could be attributed to the European Union’s ability to manage some of its members’ debt, causing investors to buy more risky asset, on belief that equities will provide reasonable risk adjusted return. For the week, the FBM KLCI rose 9 points or 0.6% to close at 1,523 points. The FBM KLCI underperformed the region as up to Thursday the index was up 0.7% against the 1.2% rise by the MSCI FExJ. Average daily trading value for the week rose 32% to RM1.9 billion (RM1.47 billion previously), which was 31% higher the three-month average of RM1.48 billion.

Equity Market Outlook
We expect the market to consolidate further. The gap resistance (1,530 – 1,545) proved to be a tough nut to crack. But we remain hopeful as long as the index holds above the 200 day smooth moving average (SMA). We expect the market continue its consolidation for another week or 2 before it breaks the 1,540 points.

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



Source: Source: ING Funds Berhad

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