Wednesday, March 28, 2012

FBM KLCI Outlook: Cautious Sentiment To Prevail

Bursa Recap: KLCI drops 4.4 points, tracking sluggish regional markets
Led by a 2.7% plunge on SHCOMP, Asian markets were lower following announcement that National Bureau of Statistics showed a 5.2% slump in profits for China’s state enterprise combined earnings during the first two months of the year. Sentiment was cautious as risk-shy investors await fresh leads on growth prospects for the U.S. durable goods orders after a sluggish March’s consumer confidence index on Tuesday.

KLCI also lost 4.4 points, led by CIMB (-12 sen to RM7.50), IOICORP (-9 sen to RM5.28), TENAGA (-7 sen to RM6.42), MAYBANK (-2 sen to RM8.83) and PETGAS (-14 sen to

FBM KLCI Outlook: Cautious sentiment to prevail
The KLCI is holding well above the uptrend line support or 30-d SMA (1572) during recent market consolidations. Looking at the chart, we believe prices could still make one more push towards historical high at 1597, but sustainability is suspect.

The key risk is that, if the candles fail to hold above the 1572 level, then most probably it will fall back towards 1549 (16 February pivot low).

Strategy wise, investors should capitalize further rallies to take profits and stay nimble, in the wake of volatile external markets as well as ahead of the looming 13th general election.

Daily KLCI - Crucial Uptrend Line (UTL) Support Near 30-Days SMA
FBM KLCI 29-03-2012

Source: HLIB Research

Tuesday, March 27, 2012

CPO: Poised To Retest RM3500-3600 Resistances

Commodity to watch: CPO

CPO: Poised to retest RM3500-3600 resistances

CPO prices jumped 1% to RM3459/MT (+8.9% YTD) amid positive news by SGS that for the first 25 days of March, exports of Malaysian palm oil products rose 6.6% to 1,055,071 tonnes from a month ago, while Intertek Testing Services said exports
gained 7.7% to 1,068,774 tonnes. The uptrend is also in line with the overall bullish CPO forecasts by the industrial experts (ranging from RM3000-4500) during the Palm Oil Conference in March. Current prices are also trading at 5.7% above 2011’s average of RM3274 and 8.1% of YTD average of RM3200.

In view of the bullish technical readings, there could be further upside to retest RM3500-3600 zones before profit taking consolidations emerge. Medium to long term significant resistance targets are RM3900-4000.

Short term supports are RM3334 (mid Bollinger band), RM3304 (30-d SMA) and RM3241 (50-d SMA). Uptrend will be disrupted if prices break below RM3241.

Daily CPO - Bullish Technicals May Spur Prices Higher Towards RM3504-RM3682
CPO 27-03-2012

Weekly CPO - Bullish Flag Candle Signals Medium Term Upside Near RM3900-RM4000
CPO 27-03-2012a

Source: HLIB Research

Dow Jones - The White Marubozu Candle Could Signal Further Upside

Wall Street Recap: Dow Jones rallies 1.2% on Fed’s liquidity pledge…
…ignoring the negative news that the Spanish government failed to secure a majority in an election last Sunday and PM’s difficulty in implementing austerity measures to cut the country’s deficit. Italy’s PM said Spain could reignite the euro-zone debt crisis if it fails to impose adequate austerity measures.

The Dow Jones rebounded 120 points or 1.2% following last week’s 1.1% slump. The rally was driven by a strong German’s business climate index, speculation that the EU’s meeting on 30 March will increase the size of its bailout fund and Bernanke’s pledge for continued accommodative policy to reduce joblessness.

Daily Dow Jones - The White Marubozu Candle Could Signal Further Upside


Monday, March 26, 2012

Wall Street Recap: Dow Jones Rebounds 35 Points But Still Lower 1.1% wow

Wall Street Recap: Dow Jones rebounds 35 points but still lower 1.1% wow
The Dow Jones dropped as much as 43 points intraday amid weaker global manufacturing PMIs from China, France and Germany couple with declining U.S. Jan new homes sales.

However, the Dow Jones ended the day with a +34 points gain as a 1.4% surge in oil prices spurred energy shares, following report that Iranian crude exports could reduce by 30k barrels/day as buyers have stopped or scaled back purchases amid tightening sanctions by the West over a dispute over Tehran’s nuclear program.

Daily Dow Jones - Down Range Bound Trading Within 50-Days SMA And Upper Bollinger Band


Genting: Poised To Climb Higher Amid An Impending Golden Cross In MACD

Stock to watch: GENTING (RM:11.00 BUY on weakness)

Genting: Poised to climb higher amid an impending golden cross in MACD

Last Friday, Genting ended +26sen to RM11.00 as volume jumped nearly 5 folds to 12.4m shares. The surge was driven by positive expectation of improving Genting Singapore results with the help of the recently-approved junket licenses as it will bring in more customers into the casino, especially from the VIP segment.

In the wake of improving technical readings. Genting is likely to stage a breakout at the downtrend line from the 52-wk high of RM11.78 (29 Apr 11). A strong DTL breakout will spur Genting prices higher from the rectangle consolidation to retest higher resistance near weekly upper channel at RM11.60. Immediate supports are RM10.76 (50-d SMA), RM10.60 (Mar’s low) and Rm10.47 (200-d SMA). Cut loss below RM10.47.

Daily Genting - Poised For A Breakout Above Downtrend Line Near RM11.20
Genting 26-03-2012

Weekly Genting - Likely To Retest Upper Channel Near RM11.60
Genting 26-03-2012a

Source: HLIB Research

KLCI: Weak Overseas Markets Could Cap Further KLCI Gains

Bursa Recap: KLCI up 2.9 points for a 5th straight gain
Last Friday, Asian markets were rattled by slowing factory activities in China, Germany and France that could spark fresh concerns over global economic growth.

Bucking regional peers, the KLCI was up 2.6 points to 1585.8 and recorded a weekly gain of 0.9% (after two straight weekly losses), as local funds returned to prop up selected index heavyweights. However, trading volume plunged 30% and gainers/losers ratio was bearish at 0.5x after the authorities prevented proprietary and day-trading by certain brokers in selected highly speculative stocks.

FBM KLCI Outlook: Weak overseas markets could cap further KLCI gains
Due to improving daily and monthly technical readings ahead of the 1Q window dressing activities, there could be one more upleg to retest 1597 (historical high) if YTD high of 1595 (5 Mar) is violated this week. Otherwise, the market is expected to stay ranged bound. Key supports are mid Bollinger band (1575), uptrend line (UTL) or 30-d SMA (1570) and 40-d SMA (1561).

In the wake of the renewed concern of global economic health, the EU leaders meeting at Copenhagen this weekend as well as the 13th general election, we advice investors to capitalize further rallies to trim their shareholdings and stay nimble amid volatile external markets.

Daily KLCI - One More Upleg To Challenge 1600-1630 Likely As indicators Hook Up
FBM KLCI 26-03-2012

Monthly KLCI - Short To Medium Term Upside Remains Positive As MACD Golden Cross Is In The Making

FBM KLCI 26-03-2012a

Source: HLIB Research

Axiata Berhad: Much Anticipated Disengagement

26 March 2012
Price Target: RM5.02
Share Price: RM5.12

# Local daily reported that U Mobile has submitted a request to terminate its domestic roaming (DR) agreement with Celcom Axiata last week.

# U Mobile is currently serving its notice of termination for 6 months, thus effective data of termination will be in mid-September but may also be earlier upon both parties’

# The article also expects that U Mobile to ink a new DR agreement with another operator over the next 6 months.

Financial impact
Celcom’s earnings to be eroded by RM150-200m annually with the following breakdown:
1. Leasing of connection (E1) – RM8.5-9m per month; and
2. Usage based (mins/MB) – RM4-7.5m per month.

# This news did not surprise us at all as we have flagged this concern in our report titled “Celcom Breaking Up with U Mobile” dated on 24th Oct 2011.

# This event is very much anticipated as it is technically more feasible (less network signaling load and unnecessary handover) and operationally more economical (lower fixed monthly connection rental) to engage with one DR partner rather than two who have overlapped coverage.

# Hence, it is unlikely that U Mobile to ink a separate 2G DR agreement with another telco since the existing 3G DR agreement with Maxis has already provided 81% coverage
of Malaysia and service fallback to 2G should be inclusive.

# U Mobile’s 10-year partnership with Maxis which also include future LTE rollout has created conflict of interest in its current relationship with Celcom who has teamed up with DiGi.

# We do not expect Celcom to terminate this agreement earlier as payment from U Mobile contributes directly to its bottom line with negligible OPEX.

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

Regulatory risks, FOREX fluctuations and competitive risks.

Unchanged as we have already factored this into our model.

Rating: HOLD, Target Price: RM5.02
Despite the challenging 4Q11, Axiata’s main businesses (Celcom, XL, Dialog) continue to execute well.

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

We reiterate our HOLD call with unchanged target price of RM5.02. 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

Friday, March 23, 2012

Genting Berhad: Junket Programmes In RWS

23 March 2012
Price Target: RM11.50
Share Price: RM10.76

# According to Business Times Singapore, Casino Regulatory Authority (CRA) has awarded junket licenses to two Malaysians operators (Huang Yu Kiung and Low Chong Aun) to allow casino operators to extend their international reach. This is given after a series of stringent checks on their background and financial positions.

# CRA said that the regime to regulate the junket operators has “been enhanced to ensure its gaming environment continues to be tightly regulated and free from criminal influence”.

# Apart from these two operators, the CRA is still evaluating other applications and is in the midst of conducting probity checks. It has rejected twelve applications so far.

# This newsflow is positive to GenT indirectly as Genting Singapore (GenS) now has the right to carry out junket programmes in RWS. These licenses are valid for a year.

# With this official permits, these two Malaysian operators will now be allowed to bring in high rollers to the casinos in RWS for a commission. However, they are only allowed to bring in foreigners and not allowed to target the local community.

# We expect GenS to be able to experience better earnings growth going forward with the help of the recently-approved junket licenses as it will bring in more customers into the casino, especially from the VIP segment.

# As for RWS’s competitor, Marina Bay Sands (MBS), it still does not have access to licensed junkets. Hence, we are positive that RWS will be able to overtake MBS in its market share once the junket programme is implemented.

1) Regulatory risk;
2) Weaker hold percentage;
3) Pandemic breakouts;
4) Appreciation of RM;
5) Higher-than-expected cannibalisation from Marina Bay Sands (MBS) and Macau casinos; 6) RWS’s junket license not renewed after a year.

Forecasts remained unchanged.

Rating - BUY, Target Price: RM11.50
(1) Defensive stock; and
(2) New sources of earnings from international markets to drive earnings growth.

(1) Highly regulated industry; and
(2) Leisure and hospitality’s earnings highly dependable on luck factor and hold percentage.

Target price remain unchanged at RM11.50 based on SOP valuation. Maintain BUY.

Source: HLIB Research

Tuesday, March 13, 2012

Dow Jones Up 38 Points For A 4th Straight Gain

Wall Street Recap: Dow Jones up 38 points for a 4th straight gain
Despite the alarming China’s trade deficit news, Dow held up well with a 38 points gain ahead of the FOMC announcement tonight as well as the eurozone finance ministers meeting in Brussels today (which is likely to approve the terms of Greece's second bailout).

Trading volume was thin as investors await some key economic releases i.e. February retail sales (tonight), Feb IPI/March consumer sentiment (16 March).

Overall, the Dow Jones’ near term outlook remains stable, driven by expectations of improving economic data, the Fed’s reinforcement of exceptionally low long-term interest rates until 2014 and the possibility of additional stimulus via sterilized bond-buying program.

The sterilized bond-buying program is designed to drive down long term interest rates to boost economic activity by buying mortgage-backed securities and Treasuries.

Daily Dow Jones - More Range Bound Trading Within The Upper Bollinger Band And 50-Days SMA


KLCI: More Profit Taking Consolidation With Short Term Support At 1549-1558 Levels

Bursa Recap: KLCI skids 14.3 points or 0.9%, worse than regional peers
Asian shares ended lower on Monday after China recorded its biggest trade deficit in 12 years as exports grew at a slower rate than expected in February, overshadowing a rebound in Japan’s machinery orders and a resilient U.S. jobs data.

Tracking the weak regional performances, sluggish Jan IPI report (+0.2% yoy and -3.1% mom) and fears of a possible dissolution of Parliament (when it resumed yesterday) that would pave the way for a general election in May/June triggered the sharp profit taking correction to KLCI.

FBM KLCI Outlook: More profit taking consolidation with short term supports at 1549-1558 levels
Following the KLCI’s sharp drop yesterday and its failure to hold above the mid Bollinger band support, we are changing our positive view on the market to cautious now as the 1.9% retracement from 5 March’s pivot high of 1594.7 (shy of its historical peak of 1,597) could be a trend reversal arising from a double-top formation.

Moving forward, the bears look stronger now as the KLCI is poised to retest lower key supports i.e. the uptrend line (UTL) or 30-d SMA near 1558 and 16 February’s low of 1549 amid weakening technical readings.

Further supports are lower Bollinger band (1545) and 50-d SMA (1541). If these levels are breached, it would eliminate all bullish potential.

Daily KLCI - More Downside Towards 50-Days SMA If The Crucial Uptrend Line Support Near 30-Days SMA Is Broken

FBM KLCI 13-03-2012

Source: HLIB Research

Wednesday, March 7, 2012

Daily Dow Jones - Critical Uptrend Line Support Near 12400

Wall Street Recap: Dow Jones tumbles 204 points, the biggest drop YTD (Year-To-Date)
The long overdue pullback had finally arrived as Dow tumbled 204 points to 12759 overnight. The selldown was triggered by potential hard landing in China’s economy, weakening Euro zone PMI and fears of a damaging Greek debt default amid speculation Greek bondholders would avoid a planned debt restructuring scheduled on 8 Mar. A default would endanger debt-laden Italy and Spain. Greece is going to be in a situation where they may default and may drag the other PIIGS. Meanwhile, the VIX, widely considered the best gauge of fear in the market, jumped above 20 for the first time since mid-February.

Daily Dow Jones - Critical Uptrend Line Support Near 12400


Hang Seng Index Outlook: More Downside Consolidation

Hang Seng index outlook: More downside consolidation
After rebounding from 52-wk low of 16170 (4 October 11) to as high as 21717 (29 February 12), HSI (Hang Seng Index) retreated 4.2% to end at 20806 yesterday, after China set a lower target for growth this year, raising fears of a hard-landing in the mainland economy.

The saucer base rally that started in October 11 is likely to come to a halt, and prolong a downward correction for HSI, reflected by the bearish technical readings and rounding top formation chart.

Immediate supports are the horizontal support (AB) near the 200-d SMA (20243), 50-d SMA (20166) and 20,000 psychological barrier. Critical support is the uptrend line (UTL) near 100-d SMA (19471).

A breakdown below the UTL (Up-Trend-Line) will spur more selldown towards 18000 levels.

Daily Hang Seng Index HSI - Technical Indicators Are Poised For A Pullback
Hang Seng Index 07-03-2012

Source: HLIB Research
AA Stocks

KLCI Is Taking Cue From Panic Overseas Markets

Bursa Recap: KLCI up 0.7-point on last minute buying support
Triggered by massive losses in HSI (-2.2%), STI (-2%) and SHCOMP (-1.7%), Asian markets were in red on renewed fears of a hard landing in China’s economy after the country cuts its 2012 GDP growth target to an 8-year low of 7.5%.

Sentiment was also dampened by concerns over a Greek default ahead of its debt-swap deal on 8 March and a sluggish Feb euro-zone PMI of 49.3 (consensus: 49.7; Jan:50.4).

Tracking the regional slump, KLCI declined as much as 8 points intraday before rebounding to end +0.7-point at 1589.9, spurred by last minute buying of selected bluechips.

FBM KLCI Outlook: Taking cue from panic overseas markets
After hitting 1594.7 on 5 March (within our envisaged immediate 1590-1600 resistance zones), broader market sentiment has turned cautious, reflected by the weakening gainers/losers ratios, declining trading volume and the flattening RSI and slow stochastic indicators.

On top of that, the overnight plunge on Wall St and Europe markets are likely to further dampen investors’ sentiment and disrupt the upside momentum for the next few days. Immediate supports are 1574 (7-d SMA) and 1566 (14-d SMA), followed by crucial uptrend line near 1551 (30-d SMA). (mid Bollinger band).

Daily KLCI - Critical Uptrend Line Support Near 1550 To Prevent Further Selldown
FBM KLCI 07-03-2012

Source: HLIB Research

Tuesday, March 6, 2012

Wall Street Outlook: Dow Jones Primed For A Pullback

Wall Street Recap: Dow Jones dips 15 points, recovering from as much as -94 points
The Dow Jones declined as much as 94 points in the early session after China announced the lowest economic growth target since 2004 and European services and manufacturing output was less than earlier estimated.

However, bargain hunting activities recouped the Dow Jones’ losses to only 15 points amid encouraging economic data such as the February ISM non-manufacturing index and Jan factory orders.

Wall Street Outlook: Dow Jones primed for a pullback
The Dow Jones was unable to move higher after surging to 52-wk high of 13087 on 29 Feb. Subsequently, it retreated to as low as 12884 before closing at 12963 overnight on profit taking consolidation after surging 25% from 52-wk low of 10404 in October 2011. Technical indicators are showing divergence signals amid a rising wedge pattern.

The rising wedge pattern is characterized by higher highs and higher lows with a contracting range, signaling an uptrend could end and a reversal pattern is in the pipeline. If prices fail to push above the wedge resistance over the next few days, selling pressure could accelerate and take prices lower.

A breakdown below uptrend line support near lower Bollinger band (12790) will spur more downside towards 12665 (50-d SMA). More solid support is near 12383 (weekly mid Bollinger band). Resistance levels are situated at 13087 to 13316 (weekly
upper Bollinger band).

Daily Dow Jones - Momentum Fizzling Out Amid Divergence Signals

Weekly Dow Jones - Technical Indicators Are Poised For A Pullback


Thursday, March 1, 2012

Daily Dow Jones - Likely To Consolidate Above The 30-Days SMA

Wall Street Recap: Dow Jones inches up 28 points from as much as 81 points
The Dow Jones jumped as much as 81 points to 13033 following a 4-year low weekly jobless claims report and personal income and spending coupled with a rally in banking shares. Bank shares rose in anticipation that the ECB’s massive liquidity injection
would ease the region's banking system and credit markets, and in time, will be positive for the European economy.

Nevertheless, the gains reduced to only 28 points amid a weak February ISM report and sharp gains in oil prices on unconfirmed report of an explosion in an unknown Saudi oil pipeline.

Daily Dow Jones - Likely To Consolidate Above The 30-Days SMA


KLCI: Higher Volume Is Needed For A More Sustainable Rally

Bursa Recap: KLCI up 3.8 points, bucking mixed regional bourses
Following a broad market rally on 29 February ahead of the fresh cash injection by the ECB, Asian markets closed mixed yesterday on profit taking amid diminishing expectations for further monetary easing by Bernanke coupled with still fragile
global PMI in Europe and China (despite improving m-o-m).

KLCI gained 3.8 points to 1573.5, lifted by selective purchase on bluechips i.e. SIME (+24 sen to RM9.93), PETCHEM (+5 sen to RM6.75), BAT (+90 sen to RM53.10), DIGI (+2 sen to RM4.04) and AMMB (+4 sen to RM6.17). However, overall volume was low at 1.62 biilion shares worth RM2.02 billion against Wednesday’s 1.94 billion shares worth RM2.69 billion. Market breadth was negative with 309 gainers as compared to 506 losers.

FBM KLCI Outlook: Higher volume is needed for a more sustainable rally
Amid the fresh injection of cheap money by the ECB, additional liquidity inflows are expected to stay firm in the near term, benefitting equities and currencies in the emerging markets.

We are cautiously optimistic that the recent breakout of 1567 (16 February’s high) will eventually spur KLCI to our new envisaged resistance 1590-1600 levels, albeit intermittent profit taking activities. However, higher volume (preferably over 2 billion shares/day) is essential for a sustainable rally.

Major supports are 1561 (10-d SMA), 1556 (mid Bollinger band) and 1544 (30-d SMA).

Daily KLCI - Technicals Are On The Mend
FBM KLCI 02-03-2012

Hourly KLCI - Overbought Technicals May Cap Further Strong Upside
FBM KLCI 02-03-2012a

Source: HLIB Research
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