Follow The Money: The Long And The Short Of It

2016 Year-end Target: 1,800 point

One of the basic equity investing strategies is to “follow the money”. In the longer-term, the word ‘money’ is almost invariably refers to the underlying corporate earnings, while in the shorter-term it may mean the flow of liquidity.

SHORTER-TERM VIEW

Curious observations of foreign liquidity behavior… Empirical evidences suggest that foreigners tended to sell on rumor, i.e. Taper Tantrum, but turned buyer/neutral on fact, i.e. Actual Taper. Thenceforth, it is notable that foreigners were again selling on yet another rumor, i.e. Countdown to Rate Liftoff, hence they were anticipated to turn buyer/neutral upon the fact, i.e. Actual Rate Liftoff.

Changes to Foreign Equity Net Purchases (since Jan-2011)

…which suggested near-term market support. As the actual rate liftoff took place in mid-December last year, a repeat of past behavior should result in a fairly supported equity market during at least the first half of 2016. On this score, the equity market began the year in a jittery mode attributable to the further slump in crude oil prices to below USD30pb. However, the FBM KLCI made only a shallow retreat with good support seen at between 1,600 to 1,630 points and subsequently staged a gradual rebound and revisited the 1,700 points levels earlier this week.

Foreign liquidity returning with sentiment buttressed by recovery in crude oil and Ringgit. It must be highlighted that the gradual rebound in local equity prices coincided with the general returning of net inflow of foreign liquidity since the final week of January this year and which also corresponded thenceforth with the improvement in crude oil prices (from ~USD27pb to 40pb) as well as the relative strengthening of Ringgit against US Dollar (from ~USD/MYR4.40 to 4.10).

Technically, the market barometer is turning bullish as it broke above the 200-day moving average last week. However, it is notable that a breakout price momentum would normally retest the breakout line as it encounters profit taking activities before the next northward push. Hence we could be looking at the market undergoing consolidation in the interim period with a prevailing resistance-turned-support level at ~1,675 points.

FBM KLCI: Price and 200-Day Moving Average

LONGER-TERM VIEW

Earnings versus price. We reiterate our assertion that empirical 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 is influenced by market sentiment and other situational issues. Hence our assessment on the likely longer-term trend path of the FBM KLCI is highly dependent on the expected earnings growth performance during the similar tenure.

Recovery in corporate earnings growth… On that score, it must be highlighted that the (Bloomberg) consensus 2016 FBM KLCI earnings growth is expected to return to a healthy level of 10.0% partly attributable to the low-base effect from general earnings underperformance in 2015. The anticipated current year performance is in stark contrast to the recent ‘earnings recession’ as attested by 2015 earnings growth of -12.1% as well 2014 and 2013 growth figures of 1.9% and -5.0% respectively.

FBM KLCI historical and forward consensus earnings growth

…with a reduced risk of forward earnings underperformance. Furthermore, we foresee a reduced risk of material downward revisions in forward earnings estimates due to the already lowered expectation hurdles (with key revenue and cost drivers as well as other assumptions pegged at quite pessimistic levels) pursuant to six consecutive quarters of earnings disappointment up until 2QCY15. In this regard, it is notable that the two most recent results quarters to 4QCY15 have produced aggregate results which met our expectations.

FBM KLCI: Earnings versus Price

Macro outlook may restrict market downside. In addition, a bear market generally occurred in reaction to drastic deterioration in the macro economic performance such during the 1998 crisis and 2008 economic downturn. Hence, as the outlook for Malaysia's economy remains rather sanguine with (Bloomberg) consensus GDP growth for this year expected at 4.4%, we do not foresee the equity market turning bear anytime soon. Having said that, we remain mindful of intermittent cyclical pullbacks that may take place due to varied situational issues, even amidst continued healthy macro growth.

Reiterate year-end 2016 FBM KLCI baseline target at 1,800 points. It is notable that FBM KLCI price trajectory since 2013 mimicked the underlying flat to negative earnings performance. On that score, the anticipated earnings growth recovery in 2016/17 may also see the benchmark similarly escaping the recent ‘price recession’. Therefore, premised on the rooted behavior whereby earnings and price are trending broadly hand-in-hand, we reiterate our 2016 FBM KLCI target at 1,800 points.

source: MIDF Research - 10/03/2016

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Malaysian EQUITY : Maintain neutral

We expect the economy to grow by 5.2% this year, a tad higher than last year due to favourable CPO price and exports. The country has proven to be more resilient to the global macro uncertainty. Fine-tuning policies are in place, which
may bring down potential growth but that should help sustain longer-term fiscal strength. Offsetting this is higher inflation in the near term, which is likely to be reflected in weaker consumption, and the risk for rate hikes in 2H.

The Malaysia equity market is supported by its strong domestic liquidity and is hence insulated against external uncertainties. This also explains why Malaysia is expensive. Its current PE premium to the region is 43% vs a historical average of 18% and a peak of 50%. Although we recently trimmed earnings growth forecast by 1.3% after the results season, more earnings downside from further deficit-reducing measures can be expected.

We maintain our Neutral stance on Malaysia to hedge against volatility risks in 2Q. The two strong domestic sectors which are likely to outperform are construction and oil & gas (O&G). Construction will do better this year, fuelled by better earnings delivery as well as announcements of key contracts such as MRT Line 2, West Coast Expressway (WCE), RAPID and Kwasa Damansara Land civil works. In tandem with the increasing capital expenditure from oil majors in Malaysia, we believe the O&G sector is experiencing a sustainable growth phase. Costing pressure may be rising due to competition, but established players with niche expertise will still be able to sustain their strong earnings momentum. We also like companies with:
(1) Top class management and solid execution; (2) Visible growth drivers; and (3) Small-mid caps

by DBS Group Research

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Budget 2013 and 4Q2012 Market Outlook & Strategy

Budget 2013 was tailored to appease the people, but constraints meant that measures were limited and hence unlikely to have much impact on the Malaysian stockmarket. We have raised our end-2012 target for the FBMKLCI from 1604 to 1616, but remain Neutral on Malaysia.

Highlights of the 2013 Budget
1. Malaysia’s fiscal policy as implied in the 2013 Budget and Economic Report is not expected to have much impact on the Malaysian stockmarket, as the Government is projected to marginally reduce its fiscal boost to the economy in 2013.
2. As this is the last Budget before the next 13th General Elections (GE13), it was tailored to appease the people, but constrained by  having to keep the budget deficit down and not rocking the boat.
3. RM3bn is being dished out under BR1M 2.0 to low-income earners, real property gains tax (RPGT) was raised, and the personal income tax rate was reduced by 1 percentage point for lower income brackets.

Malaysia Economic Report 2013
1. GDP growth forecast of 4.5-5% in 2012 (implying slower 2H2012) and 4.5-5.5% in 2013, compared to our forecasts of 4.6% in 2012 and5.2% in 2013.
2. Growth to be driven by the Construction sector in 2012 (+15.5%) and 2013 (+11.2%).
3. Federal Government operating and development expenditure to be marginally lower in 2013, budget deficit/GDP ratio to drop from 4.5% in 2012 to 4.0% in 2013, and committed to keep its debt/GDP ratio below 55%.

Sector impact and outlook
1. Although development expenditure lower in 2013, major infrastructure projects are financed ‘off-balance sheet’, which explains why Construction still driving GDP growth in 2013 which is positive for Construction and Building Materials.
2.  Measures to improve housing affordability for the rakyat mildly negative for the Property sector, but no major impact since RPGT increase was muted.

Review of our 3Q2012 market outlook and strategy
1. We expected the FBMKLCI to trade around 1604 (between 1578-1630) until Parliament is dissolved for Malaysia’s General Elections (GE13). During 3Q2012, the FBMKLCI traded between 1600-1654 which was 1.5% higher than our expected range, and ended the 3Q2012 at 1637 due to global liquidity.
2. Our market strategy had mixed results. We were Neutral on all sectors except for Overweight on Construction and Building Materials.  Banks performed in line with the FBMKLCI, but Construction, Plantations, Property underperformed and Telecommunications outperformed.
Our 4Q2012 market outlook and strategy

Our view now is that the FBMKLCI will trade around  1625 (± 1.5% with upside at 1650 and downside at 1600) until Parliament is dissolved for GE13, which could then trigger a correction to 1506 on the FBMKLCI.  We are correspondingly raising our 2012 year-end target for the FBMKLCI to 1616 from 1604. Unfortunately, the timing of GE13 is anybody’s guess, except that Parliament has to be dissolved by April 2013.

by ECMLibra

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FBM KLCI - Elliot Wave Technical Analysis

Support: 1,292 to 1,330
Resistance: 1,332 to 1,372

Strategy: The FBM KLCI declined 1.21-points last week on further market profit taking activities. The FBM KLCI closed at 1,332.77, off the week’s high of 1,344.12. The market fell in the latter part of last week on local and foreign profit taking activities.

  

The weaker support areas for the FBM KLCI are  located in the 1,292 to 1,330-zone. The key resistance areas of 1,332 and 1,372 will cap any  rebound activity. The FBM KLCI had previously consolidated in a tight range of 801 to 936 from Oct ‘08 to Apr ‘09, but broke above its previous resistance of 936.63 on 10 Apr ‘09 to surge to a fresh high of 1,347.61 on 7 April 2010.

In terms of Elliott Waves, the FBM KLCI traced a broad Wave 4A consolidation phase to the 936.63 high. Its Wave 4B low was 836.51. We have traced out a Wave 4C (Flat 3-3-5) rebound phase. Since the current rise of the KLCI is “Flat”, investors should not get caught at the end of this rebound move. After breaking above 1,248.34 (its key 62% retracement level), it surged to fresh highs of 1,308.52 (21 Jan 2010). Since then, the FBM KLCI’s next key swings were 1,224.37 (low), 1,334.34 (high) and 1,292.21 (low). The FBM KLCI may have stalled on its rise to its final Wave 5 of the “Flat” at 1,347.61 (7 April 2010). 

The local market appears weaker and poised to  break below the key 1,330 support level. This confirms the 1,347.61 high sighted  recently. Tactically, we advise clients to reduce their equity positions in view of the potential turbulencet emanating from USA on Goldman Sachs’ civil fraud news.

Some stocks that we advocate a “Sell” are:  AMMB, AXIATA, CIMB, CMSB, FABER, KNM, KYM, LATEXX, MEASAT, SAPCRES, SUPERMX, TANJONG, TOPGLOV and UNISEM.

Some “Buy” stocks that we like are: ATIS, TASCO, SUNCRN and ZHULIAN.

source: Maybank Investment Bank

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FBM KLCI Going Sideways: OSK Research

The FBM KLCI was stuck in a rut yesterday and continued to face a tough hurdle at the 1,338 pt-level, which is the “Neckline” of the modified “Head and Shoulder” detected in 2008. From the above daily chart, we can see that the key index has started to move sideways. Anyhow, there is a still potential of the key index developing a new short-term uptrend line. The market would have to surpass the recent peak of 1347.6 pts in order to complete this uptrend line.



We are still bullish on the near-term technical outlook of the FBM KLCI. Similarly, for the longer term outlook, it is obvious that the key index - which has kept on creating new highs during the 2009-2010 rally - is still trending higher in robust fashion along a longer-term uptrend.  

Once again, look for the 1,338 pt-level as the immediate resistance. The 1,344-1,358 pt area, which is the “Downside Gap” created by the market in early 2008, is now the second resistance. On the other hand, the previous peak of 1,334 pts has now become the market’s immediate support. Another support is seen at the 1,300-pt psychological mark. 

OSK Research

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BURSA MALAYSIA`EQUITY IS NOT CHEAP BUT....

FBM KLCI TARGET 1,390 PT

Equity not cheap but better than cash return
We view that the worst is over for the global economy but opine that the impending recovery is not without its risks albeit ones that are manageable at this point. At home, the Malaysian equity market may get a leg up from stronger than expected earnings growth momentum as well as further OPR hikes as BNM undertakes the process of normalising interest rates. This action, we believe, will lend support to the MYR. Our end-2010 FBM-KLCI target remains at 1,390, which is derived using a 15x P/E target on CY11 earnings.

With the current FBMKLCI at 1,320.57, this implies an  upside of only 5.3%. Nevertheless, Malaysian equities remain decently attractive as compared to holding cash which has very low real return. While we continue to like banking, property, oil & gas, power and consumer sectors for recovery play, we also advocate lowering the beta of portfolio with defensive dividend stocks.

• The worst seems to be over for global economy
Global economy continues its path towards recovery though the pace of recovery varies quite widely. Asia ex-Japan economies performed remarkably better than the advanced economies. Despite the encouraging set of numbers in 4Q09, we continue to take a cautious view of the pace of global economic recovery. US and the Eurozone, which account for 46% of global economic output, are still grappling with high unemployment rates and that will limit consumption growth in the near term.

• Recovery is not without risks but manageable for now 
Although global equity markets have bottomed out in March 2009 and have since bounced back strongly on the back of improving GDP numbers in succeeding quarters, the road has not been a straight forward one. Investors are still wary of any external shocks which may derail recovery and send the fragile global economy into a double dip. Recently, there has also been much concern over (1) sovereign debt crisis in Europe, (2) sooner than expected monetary tightening, and (3) protectionism arising from currency stand-off between China and US. However, we believe these risks are currently being managed.

• Equity valuation not cheap but better than cash return
Valuation wise, Malaysian equities are not cheap vis-à-vis regional peers. At P/E of 14.0x based on CY11 consensus earnings, valuation is just a shade lower than China 15.2x but more expensive than Indonesia 11.9x. However, EPS growth wise, Malaysia lags behind these two economies at 14.0% vs. 22% in Indonesia and 19.2% in China. Although there is no compelling reasons why investors should remain invested in the equity market, there is no alternative out there. Real return from holding cash is very low despite OPR hike as the system is flushed with liquidity.

• Earnings growth momentum may be underestimated
While valuation of Malaysian equities is not compelling, earnings growth momentum could be underestimated. Leading the earnings growth momentum are the banking stocks which have weathered the global financial crisis largely unscathed. If corporate earnings continue to remain strong and surprise on the upside, Malaysian equities will see some renewed interest in the months ahead.

• OPR normalisation and strengthening Ringgit
The Malaysian equity market may also get a leg up from further OPR hikes as BNM undertake the process of normalising interest rate. This action will lend support to the MYR. Being relatively defensive, the Malaysian market, including equities, may be a good proxy play for strengthening Asian currencies against the G3 currencies.

• Stay invested but reduce beta
Our end-2010 FBM-KLCI target remains unchanged at 1,390, which is derived using a 15x P/E target on CY11 earnings. With the current FBMKLCI at 1,320.57, this implies an upside of only 5.3%. Nevertheless, Malaysian equities remain decently attractive as compared to holding cash. While we continue to like banking, property, oil & gas, power and consumer sectors for recovery play, we also advocate lowering the beta of portfolio with defensive dividend stocks.

Recovery is not without risks but manageable for now
Although global equity markets have bottomed out in March 2009 and have since bounced back strongly on the back of improving GDP numbers in succeeding quarters, the road has not been a straight forward one. Investors are still wary of any external shocks which may derail recovery and send the fragile global economy into a double dip. The Dubai debt crisis was one which turned out to be nothing but some “noises” on the path towards recovery. 

Recently, there has also been much concern over (1) sovereign debt crisis in Europe, (2) sooner than expected monetary tightening, and (3) protectionism arising from currency stand-off between China and US. Are these noises or should investors be genuinely concerned?

The sovereign debt crisis in Europe is a reflection of excessive government spendings in yesteryears. In the centre of this crisis are the PIIGS economies i.e. Portugal, Italy, Ireland, Greece and Spain which are experiencing (1) high public debt, (2) high budget deficit, and (3) high unemployment rate. Such over-leverage public financial position and chronic economic situation has resulted in fears that governments may default on sovereign debts, triggering the sharp rise in yields as well as widening credit default swaps (CDS) premium on these sovereign debts. Greece is pretty much the focus among these economies right now as its budget deficit of 12.7% to the GDP is almost 4 times higher that allowed by Eurozone rules. 

Equity valuation not cheap but better than cash return
After taking stock of the global economy and risk factors, what then is in store for the equity market going forward? Certainly, after a strong market rebound in 2009, when the benchmark FBMKLCI rose 45.2%, all the easy money has been made. YTD, the Malaysian market continued to lag regional peers as it posted gains of 3.8% as compared to Indonesia’s 9.6%. Valuation wise, Malaysian equities are not cheap vis-à-vis regional peers. At P/E of 14.0x based on CY11 consensus earnings, valuation is just a shade lower than China 15.2x but more expensive than Indonesia 11.9x. However, EPS growth wise, Malaysia lags behind these two economies at 14.0% vs 22% in Indonesia and 19.2% in China. On dividend yield, Malaysia is just about average, ranking the 7 highest at 3.2% among 13 selected Asian economies.

It is then not surprising to see declining foreign participation in Malaysian equity market. Foreigners only made up 27% of transactions on Bursa Malaysia in 2009, the lowest in 6 years. Foreign ownership of Malaysian equities have also fallen over last 18 months or so and stood at 20.4% as of Dec 2009. On the flip side, we could argue that Malaysian equities should be more defensive now as there is less selling pressure by foreigners now.

Monetary tightening in G3 economies is unlikely in the near term         Stand-off between China and US will have serious repercussions by believe common sense will prevail            Malaysian equities are not cheap and do not have the strongest earnings growth         Foreign participation has declined which may be a blessing in disguis

With no compelling reasons why one should be in the equity market, should we then follow the widely propagated axiom of “sell in May and go away”? Perhaps. But what are the alternatives? Real return on cash is very low now at 0.7% based on average 3-month FD rate. Although interest rates are rising on expectation of further 25-50 bps OPR hikes in the coming months, we want to highlight that BNM is merely normalising interest rate to prevent financial imbalances. We do not expect BNM to adopt a growth restrictive monetary policy and as such, scope for further interest rate increase may be limited. Furthermore, the system is currently flushed with liquidity as can be seen by the double digits y-o-y expansion in the narrow money supply M1.

Earnings growth momentum may be underestimated
While the P/E valuation of Malaysian equities is not compelling, earnings growth momentum could be underestimated. Over the past few quarters, we have noticed considerable improvement in corporate earnings as fewer companies failed to meet analysts’ earnings expectation while earnings revision ratio continues to be on an uptrend after bottoming out in 4Q08. Leading the earnings growth momentum are the banking stocks which have weathered the global financial crisis largely unscathed. Credit cost remains manageable and on the downtrend while strong loans growth from the household sector underpin earnings growth. Going forward, further OPR hikes is expected to be earnings accretive while a return of capital market transactions willl boost fee-based income.

If corporate earnings continue to remain strong and surprise on the upside, Malaysian equities will see some renewed interest in the months ahead.

We are positive on Malaysian companies which derive income mainly from domestic or regional sources but have USD, EUR and/or JPY denominated liabilities or costs. Some of these companies include Tenaga, AirAsia, MAS and UMW.

However, we are negative on Malaysian companies which derive income denominated in USD, EUR and/or JPY but have MYR denominated liabilities or cost. Some of these companies include Topglove, Kossan, Hartalega, Supermax etc. 

Certain companies which have overseas operations in US, Europe and/or Japan may benefit from natural hedge if borrowings are sourced domestically in the country of operation. Nevertheless, consolidated accounting earnings will still be impacted by weaker foreign currencies. Companies which fall into this category include YTL Power, Pelikan KNM etc.

Our recommendations
To sum it up, we do not see significant upside in the equity market from current levels, in particular the big-caps which make up the FBM-KLCI benchmark index. Our end-2010 FBM-KLCI target remains unchanged at 1,390, which is derived using a 15x P/E target on CY11 earnings. With the current FBMKLCI at 1,320.57, this implies an upside of only 5.3%.

While our base case scenario does not think that risks from external shocks will be significant, we cannot rule out the possibility of a market sell down driven by (1) failure of Eurozone governments in preventing member nations’ from debt default, (2) tightening of monetary policy, and (3) escalation of stand-off between China and US on differing views on the CNY valuation.

Barring any external shocks, the alternative of holding cash is not appealing due to very low real returns. As such, we recommend investors to stay invested to capitalise on potentially greater than expected earnings growth momentum, especially from the banking sector. Furthermore, the normalisation of interest rate by BNM will lend support to MYR, and as such, Malaysian equities may be a good proxy to ride the strength of Asian currencies.

There are no changes to our sector calls other than the downgrading of the gaming sector from OVERWEIGHT to NEUTRAL as valuations of the larger capitalised Genting and Genting Malaysia are fair and has limited upside going forward. We continue to like banking, property, oil & gas, power and consumer sectors for recovery play.

On stock picks, we prefer Maybank, CIMB, Public Bank and Tenaga to ride the earnings growth momentum. Mid- and small-cap growth stocks include Wah Seong and Sunrise. To lower the beta of our suggested portfolio, we have included DiGi, YTL Power and Berjaya Sports Toto for defensive dividend play.

source: ECMLibra Investment Research

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FBM KLCI WEEKLY TECHNICAL ANALYSIS

Poised to Challenge 1,334 High Before Correction
Bursa Malaysia shares staged strong rebound last week on positive news flow with rubber glove makers and technology stocks leading gains, given the bullish demand outlook and optimism ahead of the Invest Malaysia conference when the New Economic Model will be announced by the government.

The blue chip barometer FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) bounced back 18.54 points or 1.4% last week to close at 1,315.14,with CIMB (+56sen), Sime Darby (+24sen), Maybank (+18sen) and TM (+20sen) representing almost four-fifth of the index’s gain. Daily average traded volume and value surged to a two-month high of 1.04bn shares worth RM1.6bn, compared with  the 687.4mn shares and RM1.14bn average the previous week.

Spot month March KLCI futures contract traded on Bursa Malaysia Derivatives Berhad climbed 23 points, or 1.8% week-on-week to 1,321, improving significantly to a 5.9-point premium to the cash index, against the 1.4-point premium the previous Friday.

The domestic stock market ended lower last Monday, dragged down by weaker regional markets after the surprise interest rate hike in India raised concern that central banks in the region will introduce more steps to tackle inflationary pressure.  However, stocks bounced back sharply the next day, with rubber glove makers leading the rise on optimism the passage of a US healthcare bill by President Barack Obama will boost the demand for rubber gloves.

Stocks extended recovery on Wednesday, with technology stocks leading gains in line with regional peers due to signs of a robust rebound in global demand for semiconductors.  Despite a mixed showing on regional markets the following day due to concern over European sovereign debt, local stocks extended gains with lower liners leading gains on increased rotational trading plays while blue chips consolidate.

The market sustained gains for a fourth straight session on Friday, lifted by hopes next week’s Invest Malaysia conference will see the government proposing more liberal measures to promote foreign direct investments in the New Economic Model, encouraging more investors to participate.   

The KLCI rose from intra-week low of 1,292.21 mid-morning session last Monday subsequently recovered for the next four consecutive day’s to close at the week’s high of 1,315.14 on Friday, clocking a wider 22.93-point trading range last week, against 18.49 points the previous week.  The FBM-EMAS Index rose 188.35 points or 2.16% last week to close at 8,911.51, while the FBM-Small Cap Index rallied a whopping 528.43 points, or 4.87% to 11,381.62, triggered by resurgent buying interest in lower liners.

The daily slow stochastics indicator for the KLCI is now in the overbought zone after triggering a buy signal last Tuesday (Chart 1), while the weekly indicator has leveled in the overbought area.  On the 14-day and 14-week Relative Strength Index (RSI) indicators bore higher readings of 62 and 67 respectively, neutralizing last week’s bearish divergence signals.

above: click to enlarge

On the other hand, the daily Moving Average Convergence Divergence
(MACD) trend indicator has re-hooked up and is set to trigger a buy signal, strengthened by a similar hook-up on the weekly MACD indicator  (Chart 2).  On the 14-day Directional Movement Index (DMI) trend indicator, the +DI and –DI lines expanded outwards to signal stronger up-trend ahead, as shown by the rising ADX line.

above: click to enlarge

Conclusion
While momentum indicators reflected overbought condition for the KLCI, trend indicators are reversing their bearish signals, with the daily MACD set to trigger a buy on further strength.  As such, investors can expect further upside early this week ahead of the Invest Malaysia  conference on Tuesday and Wednesday, before profit-taking and selling interest which is likely to increase by the later part of the week given the sell-on-fact traders mentality. 

above: click to enlarge

Note that last week the index managed to hold above 1,292, the 38.2% Fibonacci Retracement (FR) level of the 1,224 trough to  1,334 peak, before bouncing back up for a strong V-shape recovery  (Chart 3).  The index’s strength in sustaining above 1,308, the 23.6%FR level, will improve upside bias toward 1,325 and subsequently the two- ear peak of 1,334 of 11 March this week.  A breakout above this peak, specially backed by strong follow-through buying, will fuel upside toward our immediate upside target of 1,354, representing the 76.4%FR of the bearish trend from 1,525 all-time high to the 801 low.  Immediate support is now upgraded to 1,308, with 1,300 as a stronger base. 

For this week, we expect rubber glove makers Adventa, Latexx and Supermax to extend gains on hopes earnings will expand further with passage of the US healthcare bill boosting demand, while Kinsteel, UEM Land, Dialog, Kencana, SapuraCrest, RCE Capital, 3A resources, Leader Universal and Land & General to appreciate further on keen rotational plays.     

source: TA Securities

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