Sep 1, 2015

Malaysia Bear Market Beckons? 2015 Year-end Target Under Review

Macro outlook may restrict market downside

FBM KLCI STILL IN BULL TERRITORY
The usual definition of a bear market is when the following criteria are concurrently met: The benchmark indexes decline by at least 20 percent from their recent peaks or 12-month highs, i.e. enter bear territory, and for at least a 2-month period. The following table lists the extent of FBM KLCI percentage change during the current downturn as well as the -20 percent threshold, based on (i) its prevailing 12-month high, and (ii) its all-time peak in July last year.

FBM KLCIklse FBM KLCI dipped into bear territory, temporarily. The FBM KLCI was actually dipping into bear territory early Tuesday morning before buying support emerged and quickly pulled the benchmark index out of the red zone. The ensuing technical rebound managed to lift the FBM KLCI more than 80 points away from the bear threshold levels. Therefore, despite the massive August drumming, it is notable that the local bourse has yet to decisively enter into the bear territory, let alone to be classified as a bear market.

MALAYSIA: Consensus GDP forecasts (as of 21 August):malaysia consensus GDP

Macro outlook may restrict market downside… Empirically, a bear market generally occurred in reaction to drastic deterioration in the macro economic performance such during the 1998 crisis and 2008 economic downturn. However, severe cyclical pullback not amounting to a bear market may take place as a result of other situational issues which are affecting market sentiment even amidst continued healthy macro growth. Hence, as the outlook for Malaysia's economy remains rather sanguine with consensus GDP growth for this year and next expected at 4.9% and 5.0% respectively, we do not foresee the market turning bear anytime soon.

…unless Ringgit situation continues to exacerbate. Having said that, as alluded in our Strategy note titled “Ringgit performance and FBM KLCI” dated 21 August 2015, it is important for the currently distressed Ringgit to regain its course and re-track the major G7 currencies (notably Euro and Japanese Yen). We reckon any prolonged failure of the Ringgit to regain its course may result in an unfavourable shift in Malaysia’s macro prospects and, by extension, the corporate earnings outlook.

Secular trend path of FBM KLCI dependent on earnings growth performance. We reiterate our assertion that historical observations between earnings and price are conclusive with regard to the nature of their secular direct relationship. This is despite the ever present ‘noises’ from short-term price volatility which, as mentioned earlier, is influenced by market sentiment and other situational issues. Hence our assessment on the likely forward secular trend path of the FBM KLCI is highly dependent on the expected earnings growth performance during the next 12 to 18 months. At this juncture, the consensus 2016f FBM KLCI earnings still points toward a recovery whereby growth is forecasted to return to a healthy, and more normal, level of circa 9.4% (2015e: -3.0%).

IS WALL STREET TURNING BEAR?
After the recent selloff on Wall Street, some investors are beginning to question the robustness and sustainability of US economic recovery. On this score, let’s look at the US Treasury (UST) market for what we deem as a reliable and near definitive answer. Bear in mind that the UST yield curve spread (YC-Spread) correctly predicted all seven previous US recessions since 1967 (arguably a better track record than perhaps all known economists both in the present and past).
UST Yield Curve Spread versus GDP Growth

UST Yield Curve Spread versus GDP Growth:
ust yield curve vs GDP

US Govy market expects continued macro growth. At least until this juncture, the YC-Spread remains well inthe positive. This can be interpreted as the UST market believing the US economy will continue to grow into the foreseeable future. Hence the secular trend direction of the US equity market should likewise remain upward sloping.

US equity market undergoing cyclical pullback to correct excessive valuations. In early May this year, US Fed Chair Janet Yellen predictively remarked, "I would highlight that equity market valuations at this point generally are quite high," and added "There are potential dangers there." Thus what happened recently on Wall Street can arguably be characterized as a cyclical pullback (on quite an extreme bout) to recalibrate its relatively lofty market valuations.

by MIDF Research

Aug 19, 2015

AMFirst: Oversold?

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AmFirst Real Estate Investment Trust Stock Code 5120

amfirst_analysis

AmFirst Real Estate Investment Trust may experience a technical rebound after being oversold. The rebound may kick in if the stock recovers back above the MYR0.765 level, with a target price of
MYR0.80, followed by MYR0.85. In the meantime, the stock may trend lower if it fails to stabalise. Support may be found at MYR0.735, where traders can exit upon a breach.

by RHB Retail Research

AMFIRST REAL ESTATE INVESTMENT TRUST
The Company is an investment company. The Company owns and invests in real estate whether directly or indirectly through the ownership of single-purpose companies.

Aug 12, 2015

Maybank Should Attract Buyer On Weakness

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MALAYAN BANKING BHD  Stock Code: 1155

maybank analysisTechnical Comments:
Maybank should attract buyers on further weakness towards RM8.40 or the 17/12/14 low (RM8.25), with stronger support at RM8.00, prior to an oversold rebound towards the 23.6%FR (RM8.71), with next hurdle seen at the 38.2FR 9.00). Similarly, Sime Darby is attractive to buy on further sell-off towards the 11/8/15 low (RM8.01), RM7.80

by TA Securities

MALAYAN BANKING BERHAD
The Bank's main activities are commercial banking investment banking Islamic banking offshore banking leasing and hire purchase insurance factoring trustee services asset management stock broking nominee services venture capital and Internet banking.

Aug 11, 2015

Denko – Bullish “Piercing Line”

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Denko Industrial Corporation  Stock Code: 8176

denko analysis above: Denko Daily Chart

Denko Industrial Corporation may experience a technical rebound after forming a bullish “Piercing Line” pattern in its latest session. Traders may buy as a bullish bias could be present above the MYR0.35 level, with a target price of MYR0.38, followed by MYR0.405. The stock may drift lower if it does not react to the current bullish signal. In this case, support is anticipated at MYR0.315, where traders can exit upon a breach.

by RHB Retail Research

DENKO INDUSTRIAL CORPORATION BHD
The Group is originally involved in the manufacture and distribution of packaging materials also manufactures and distributes plastic pipes and ladies' undergarments and provides maintenance services for sewerage systems.

Aug 6, 2015

Hibiscus Petroleum – Technical Buy

Extending Uptrend: Hibiscus Petroleum Bhd (stock code 5199)

Closed: RM 0.87  Resistance:  (R1) 0.96 / (R2) 1.06  Support:  (S1) 0.84 / (S2) 0.78

Hibiscus Daily Chart (click to enlarge)hibiscus analysis

Hibiscus Petroleum Bhd has reverted to an uptrend since hitting all time low at 65 sen on 29th May 2015. On 1st July 2015, it broke the 50-day moving average  (blue line)  after climbing 3 sen and closed at 77.5 sen. Following the breach, it continued trade upwards within the uptrend channel and broke the 100-day moving average  (pink line)  on 21st July 2015.

Yesterday, it climbed 0.5 sen and touched both the 200-day moving average  (orange line) and the upper channel of the uptrend. Following yesterday’s gain , the stock could retrace to the lower uptrend channel with immediate support at 84 sen marked by 61.8% Fibonacci retracement level.

Technical indicators are positive with the MACD crossing above its signal line on 5 th June 2015 coupled with RSI in the overbought zone. Immediate resistance is seen at 96 sen marked by 38.2%
Fibonacci Retracement line. Second resistance is sen at RM1.06 where 61.8% Fibonacci Retracement line stood.

For the downside, we advise traders to cut loss if the price falls below the second support of 78 sen marked by 100-day moving average  (pink line)

by JF Apex Securities

HIBISCUS PETROLEUM BERHAD
The Company intend to establish as a junior independent Malaysian oil and gas E&P company with the sole focus on developing small oil and gas fields in the South Asia South East Asia and Oceania regions. The Company plan to achieve this by identifying and acquiring target company assets which participate in upstream oil and gas E&P activities. Upstream oil and gas activities consist of exploration development and production of oil and gas resources.

Aug 4, 2015

KKB Engineering Berhad – Technical Outlook

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KKB Stock Code: 9466

KKB Engineering Berhad fabricates steel, provides civil construction, hot dip galvanising and manufactures LPG cylinders and cylindrical steel drums. Through its subsidiaries, the Company manufactures UPVC roofing sheets, pipes, and sub-contracts welding works. KKB Engineering also has operations in manufacturing and trading steel pipes and other related steel products.

below: KKB Daily Chart

KKB daily chart analysis 
Our medium (6-12 months) term target price for KKB is RM2.90 hence offers an upside potential of around 55.9% from current level.

by Affin Hwang Capital

Jul 29, 2015

Focus Lumber Analysis

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Focus Lumber may trend higher after breaking its resistance level


Stock Code: 5197

focus lumber analysis

Focus Lumber may trend higher after recently surpassing the MYR1.63 level. Traders may buy as a bullish bias could be present above this level, with a target price of MYR1.88, followed by MYR1.96. The stock may drift sideways if it cannot sustain above the MYR1.63 mark. In this case, further support is anticipated at MYR1.55, where traders can exit upon a breach to avoid a further correction.

by RGB Research

The Company is mainly engaged in the manufacture and sale of plywood veneer and LVL.