KUALA LUMPUR (March 19): Hwang DBS Vickers Research said technically speaking, Malaysian equities could be losing steam after slipping slightly below an uptrend line.
In its traders spectrum outlook issued on Monday, it said from a psychological perspective, signs of fatigue are starting to be visible on the local bourse judging by its subdued reactions to positive overseas leads of late.
“This may signal a downward bias with the KLCI probably sliding towards the bottom end of its 1,555-1,600 trading range going forward,” it said.
HDBSVR said after tumbling to an intra-week trough of 1,562.97, the KLCI barely recovered to finish at 1,571.40 on Friday, down 7.6-point or 0.5% week-on-week.
“Nevertheless, in the small-mid cap space, the FBM 70 Index (-0.4%) and the FBM ACE Index (+0.1%) saw mixed weekly changes,” it said.
HDBSVR said trading activity, meanwhile, matched the preceding week’s daily average volume of 1.5 billion shares valued at RM1.8 billion.
The research house said that in contrast, the bulls continue their reign in other parts of the region.
Last week, the indices staged a strong rally, the Philippines index was up 3.3% week-on-week, Thailand (+2.7%) and Japan (+2.0%) as eight of the 11 Asian stock exchanges tracked by HDBSVR ended in the positive territory.
With the eurozone’s sovereign debt strains being put on the backburner for the moment, key U.S. barometers also saw weekly gains of between 2.2% and 2.4%.
“On a year-to-date basis, Malaysia will likely finish the first quarter of the year with the smallest stock market return (of +2.7%) among the 11 regional bourses,” it said.
HDBSVR said with only two more weeks to end-1Q12, the current three best performers across Asia are Japan (up 19.8% so far this year), Philippines (+17.7%) and Thailand (+16.0%) while Wall Street indices were up between 8.3% and 17.3%.
“The relative underperformance of our local bourse – coming on the back of its resilient performance last year – could be partly attributable to a dearth of fresh re-rating catalysts, as well as possible jitters on the impending general election that is likely to be called in a matter of months,” it pointed out.
HDBSVR said the dry spell of market-moving news may drag on this week. The pipeline is expected to be fairly quiet except for: (a) Bank Negara Malaysia’s release of the 2011 Annual Report (which would reveal forward looking economic indicators like the central bank’s projections on GDP growth rate and inflation) on Wednesday; and (b) several listed companies – such as Berjaya Sports Toto (on Wednesday) and SP Setia (Thursday) – announcing their latest quarterly financial report cards.
“On the chart, a cut beneath (albeit just marginally) an uptrend line last week has raised the probability that the FBM KLCI would see weaknesses ahead.
“Unless the index climbs above the positive sloping trend line any time soon – which has been in existence since late Sep last year (chart overleaf) – a deeper market pullback may be on the cards,” it said.
HDBSVR said if so, then a double-top trend reversal pattern could be evolving. The research house said in particular, a negative technical outlook will be probable should the bellwether – after hitting a recent high of 1,595 to test its historical peak of 1,597 – drop below the support thresholds of 1,555 and 1,530 going forward.
However, on the upside, the resistance levels of 1,580 (immediate) and 1,600 (next) remain the stumbling blocks for the FBM KLCI to overcome.
In its traders spectrum outlook issued on Monday, it said from a psychological perspective, signs of fatigue are starting to be visible on the local bourse judging by its subdued reactions to positive overseas leads of late.
“This may signal a downward bias with the KLCI probably sliding towards the bottom end of its 1,555-1,600 trading range going forward,” it said.
HDBSVR said after tumbling to an intra-week trough of 1,562.97, the KLCI barely recovered to finish at 1,571.40 on Friday, down 7.6-point or 0.5% week-on-week.
“Nevertheless, in the small-mid cap space, the FBM 70 Index (-0.4%) and the FBM ACE Index (+0.1%) saw mixed weekly changes,” it said.
HDBSVR said trading activity, meanwhile, matched the preceding week’s daily average volume of 1.5 billion shares valued at RM1.8 billion.
The research house said that in contrast, the bulls continue their reign in other parts of the region.
Last week, the indices staged a strong rally, the Philippines index was up 3.3% week-on-week, Thailand (+2.7%) and Japan (+2.0%) as eight of the 11 Asian stock exchanges tracked by HDBSVR ended in the positive territory.
With the eurozone’s sovereign debt strains being put on the backburner for the moment, key U.S. barometers also saw weekly gains of between 2.2% and 2.4%.
“On a year-to-date basis, Malaysia will likely finish the first quarter of the year with the smallest stock market return (of +2.7%) among the 11 regional bourses,” it said.
HDBSVR said with only two more weeks to end-1Q12, the current three best performers across Asia are Japan (up 19.8% so far this year), Philippines (+17.7%) and Thailand (+16.0%) while Wall Street indices were up between 8.3% and 17.3%.
“The relative underperformance of our local bourse – coming on the back of its resilient performance last year – could be partly attributable to a dearth of fresh re-rating catalysts, as well as possible jitters on the impending general election that is likely to be called in a matter of months,” it pointed out.
HDBSVR said the dry spell of market-moving news may drag on this week. The pipeline is expected to be fairly quiet except for: (a) Bank Negara Malaysia’s release of the 2011 Annual Report (which would reveal forward looking economic indicators like the central bank’s projections on GDP growth rate and inflation) on Wednesday; and (b) several listed companies – such as Berjaya Sports Toto (on Wednesday) and SP Setia (Thursday) – announcing their latest quarterly financial report cards.
“On the chart, a cut beneath (albeit just marginally) an uptrend line last week has raised the probability that the FBM KLCI would see weaknesses ahead.
“Unless the index climbs above the positive sloping trend line any time soon – which has been in existence since late Sep last year (chart overleaf) – a deeper market pullback may be on the cards,” it said.
HDBSVR said if so, then a double-top trend reversal pattern could be evolving. The research house said in particular, a negative technical outlook will be probable should the bellwether – after hitting a recent high of 1,595 to test its historical peak of 1,597 – drop below the support thresholds of 1,555 and 1,530 going forward.
However, on the upside, the resistance levels of 1,580 (immediate) and 1,600 (next) remain the stumbling blocks for the FBM KLCI to overcome.
