KUALALAMPUR MALAYSIA Weekly Technical view on KLCI

The week started with FBM KLCI index gained 2.64 points at 1730.10. During the week, performance of our benchmark index was underpinned by strong gains in CIMB following news suggesting its mega merger with RHB capital and MBSB may be called off. Market sentiment was cautious amid further weakness in oil prices while investors remained concerned about the global economy after the World Bank has cut its global growth forecast on subdued performance in the EURO zone, Japan and some major economies. Yesterday KLCI ended higher after oil prices rebound the most in more than 2 1/2 years from close to six year low. This whole week index shown side way movement of almost 28 points.

The FBM KLCI index lost 1.43 points or 0.08% at 1743.57 on Friday. Finance Index fell 0.17% to 15366.83 points, Properties Index up 0.03% to 1286.28 points and Plantation Index down 0.40% to 7776.16 points. Market traded within a range of 13.89 points between an intra-day high of 1746.24 and a low of 1732.35 during the session.

The index went down following weighed down by selling in Petronas-linked and banking counters. Investor’s risk appetite were dampened by the weak lead from overnight US market due to drop in crop price and the surprise move of Swiss National Bank scrapping its three-year policy of capping the Swiss franc against the euro.

FBMKLCI Week's Performance
Open: 1740.19
High: 1746.24
Low: 1732.35
Close: 1743.57
Change (Points): 11.13
% Change: 0.64%

Market Forecast for week ahead:

The global market tone came under fresh pressure from ongoing weakness in currency and commodity markets, highlighted by a huge overnight weekly decline in the euro and yen as well as oil and copper. It is anticipated that market will move upside in the coming week as technically there is a resistance at 1750.

Technical indicators:

RSI for this week is 38.801 with CCI at 98.804. Besides, difference line of MACD 29.310 overlapping its signal line (22.339).

Support 1: 1725
Support 2:1706
Support 3:1670
Resistance 1: 1750
Resistance 2: 1770
Resistance 3: 1789

ECONOMIC FACTORS:

• SapuraKencana Petroleum Bhd signed a US$2.3 billion Islamic loan with 11 lenders - the largest Islamic facility till date. The loan will convert a portion of its existing conventional multi-currency facility (MCF) borrowings into a Shariah based facility with 11 local, regional and international banks.
• AirAsia Group to register stronger earnings in 2015, given the significant benefits from lower jet fuel price. It is assumed average yields (including surcharge) to drop 7.6 per cent in 2015 after an assumed decline of 5.8 per cent in 2014.
• The ringgit opened marginally lower against the US dollar this morning due to lack of buying support.
• Celcom Axiata Bhd will invest RM100 million in capital expenditure (capex) to ensure connectivity in flood-prone states in the east coast of Peninsular Malaysia. Its CEO said the telco recognised the importance of full connectivity in times of crisis – not only for residents within the affected areas, but also to the relief teams and organisations working round the clock to deliver aid.
• MISC Bhd’s share price on the Bursa Malaysia slipped after the company aborted the sale of its wholly-owned subsidiary, MISC Integrated Logistics Sdn Bhd (MILS).
• Asian currencies tend to depreciate against the US dollar in the 12 month period prior to a peak in oil prices and this time around, the peso is likely to be the worst performing Asian currencies, according to a study.
• The government should review the budget given the significant change in oil prices, said CIMB Group Holdings Bhd chairman. One of the targets that external observers are watching for is the budget deficit and the target of 3% budget deficit by 2015. And also here has to be clarity in terms of where Petronas dividends are going to be and what are the main drivers because the dividends are not just a function of oil price but also a function of the group's capital expenditure plans.
• The Ministry of International Trade and Industry (Miti), which aims to see intra-Asean trade grow from 24% of total trade now to 30% to 35% in the next few years, said the harmonisation of rules and regulations for the Asean Economic Community (AEC) is still a work-in-progress. The challenge is because Asean is made up of 10 countries that can be divided into different tiers in terms of per capita income, population and economic development.
• Bright Packaging Industry Bhd has entered into a purchase-sale agreement with Zao Philip Morris Izhora, a multinational tobacco manufacturing company in Russia to supply aluminium foil worth US$15 million. Intra- Asian trade is likely to expand from 24 percent to 34 percent, spurred by zero-duty incentives on Asian Free Trade Area (AFTA).
• Bursa Malaysia Securities has issued an unusual market activity query to IFCA MSC Bhd due to the recent rise in the price and volume of its shares. The counter closed 4.5 sen lower at 95 sen, with 42.05 million shares changing hands.