FMB KLCI - DAILY - 5/7/2019
Still Overbought, Consolidation May Persist
• The FBM KLCI (-0.2%) extended its losses after lingering mostly in the negative territory yesterday, bogged down by the renewed volatility in crude oil prices, coupled with the on-going global trade uncertainty. The lower liners – the FBM Small Cap (+0.9%), FBM Fledgling (+0.5%) and FBM ACE (+0.9%), however, all extended their gains, while the broader market closed mostly higher.
• Market breadth turned positive as advancers outstripped decliners on a ratio of 466-to-348 stocks. Traded volumes, however, fell 5.7% with 2.84 bln shares exchanging hands.
• Key losers on the local bourse was, Petronas Gas (-18.0 sen), followed by Tenaga (-10.0 sen), Hong Leong Bank (-8.0 sen), CIMB (-6.0 sen) and Press Metal (-5.0 sen). Among the biggest decliners the broader market include Aeon Credit (-10.0 sen), UMW Holdings (-10.0 sen), MPI (-10.0 sen), Shangri-La (-9.0 sen) and Oriental Holdings (-6.0 sen).
• Meanwhile, Dutch Lady (+50.0 sen), Yinson Holdings (+41.0 sen), BAT (+38.0 sen) and Fraser & Neave (+30.0 sen) advanced on the broader market. Revenue Group jumped 20.0 sen to close at a fresh all-time high level. FBM KLCI winners on Thursday were Petronas Dagangan (+10.0 sen), Axiata (+4.0 sen), Hap Seng (+4.0 sen), KLK (+4.0 sen) and MISC (+4.0 sen).
• Asia benchmark indices finished mixed as the Nikkei rose 0.3%, taking cue from the positive developments on Wall Stret overnight. Both the Hang Seng Index and the Shanghai Composite, however, fell 0.2% and 0.3% respectively as the latter remained uncertain from the on-going Sino-U.S. trade developments. ASEAN stockmarkets, meanwhile, closed mixed on Thursday.
• U.S. stockmarkets were closed for the Independence Day public holiday.
• Meanwhile, European benchmark indices finished mixed as the CAC and DAX rose 0.03% and 0.1% respectively after Italy managed to convince the European Union that the country would bring down its debts in line with the European Union’s fiscal rules. The FTSE, however, fell 0.1% after enduring a choppy trading session.
THE DAY AHEAD
• The FBM KLCI decoupled from the positive performance on Wall Street and other global indices a day earlier as its recent uptrend has left it overbought. Even after yesterday’s slight losses, the key index remains overbought which could prolong the consolidation spell into the final trading session of the week.
• We continue to think that the recent gains were already overdone after the key index gained some 8.0% from its year low a month ago. We think the recovery has more-than-reflected corporate Malaysia’s fundamental prospects for the year that has also left it overbought. Therefore, we still see a consolidation spell to allow the recent gains to be digested. On the downside, the resistances are at 1,680-1,682 levels, followed by the 1,670 level. The resistances, meanwhile, are at 1,694 and 1,700 respectively.
• The FBM Small Cap index is becoming increasingly overbought after the recent uptrend and a pullback is already due. Consequently, we think profit taking activities could set in over the near term as market players could opt to lock in some of their profits ahead of the weekend.
The Market Pulse is a proprietary report courtesy of Malacca Securities Sdn Bhd (a participating organisation of Bursa Malaysia Securities Berhad) and has been abbreviated by Focus Malaysia. The report is for information purposes only and is not a recommendation to buy or sell any securities or financial instruments.
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