MALAYSIA STOCKS ANALYSIS: KLSE Market risks breaking down

Backed by firmer commodity prices, Bursa Malaysia started out the week slightly above water, with the FBM Kuala Lumpur Composite Index (FBM KLCI) advancing 0.35 point to 1,771.39 on bargain hunting interest.

As usual, blue chips led the way in early business, but it was subdued later due to limited support from the big boys because the fresh exchange of barbs between North Korea and the US, prompting investors to adopt a cautious approach.

Elsewhere, most second and lower liners drifted lower, as an uninspiring performance in the Asia-Pacific region and a weaker ringgit against the greenback weighed on the local sentiment.

Given the dearth of market-stimulating leads, the key index subsequently moved sideways on sporadic buying alternating with intermittent profit-taking selling throughout the day, causing the key index to lose 1.9 points to 1,769.14 in range-bound trading on Monday.

Wall Street widened losses and technology-related shares tumbled on renewed selling the next day due to geopolitical uncertainty after North Korea’s foreign minister said US President Donald Trump’s tweets over the weekend were tantamount to a declaration of war.

In the region, stocks outside China and Hong Kong slumped against the backdrop of rising tensions on the Korean Peninsula.

Though crude oil prices spiked a hefty US$1.56 a barrel to US$52.22, the best level in five months and other commodities soared, they were not helping the local bourse this time round, as continuous depreciation of the local currency against the greenback kept most investors at bay.

Mirroring the frail offshore trend, the local bourse retreated from an intra-day high of 1,769.12 in early hours to a low of 1,761.21 in late morning, losing as much as 7.93 points before trimming losses in the afternoon to settle at 1,765.59, shedding 3.55 points in sluggish session on Tuesday.

There were no clues coming from the US, with the Dow falling for the third consecutive session and crude oil bulls pausing for a breather, as they awaited the release of Trump’s tax reform plan.

In Asia, Hong Kong, Singapore and Shanghai markets rose but Japan, South Korea and Australia fell, as investors were divided over the recent comments from Federal Chair Janet Yellen about the need to carry on gradual rate hikes.

Like the regional peers, Bursa Malaysia put up a mixed show.

While certain blue chips struggled, most second and lower liners posted gains on greater retail participation. Although the FBM KLCI lost 1.35 points to 1,764.24, advancers beat decliners by 401 to 376 in mid-week.

Thereafter, the local bourse stayed in consolidation mode and despite the Dow snapping its three-day losing streak and the black commodity rebounded, investors simply were not interested, as persistent weakness in the ringgit against the US dollar dampened investors’ mood.

In lacklustre trading, the key index shed 6.18 points on Thursday, thus carving out a negative signal.

And yesterday, Bursa Malaysia remained in correction mode, dropping an extra 2.48 points to 1,755.58 on follow-through selling.

Statistics: For the week, the principal index skidded 15.46 points, or 0.9% to 1,755.58 yesterday, versus 1,771.04 on Sept 22.

Turnover for the regular week was 12.695 billion units worth RM11.575bil, against 10.402 billion shares amounting to RM8.329bil done during the four-day holiday-shortened previous week.

Outlook: Bursa Malaysia fell for the second straight week, with the FBM KLCI touching the lowest level in more than two months.

The pullback was in line with our forecast, but the bearish tone caught many people by surprise.

Based on the daily chart, the local bourse recorded losses for 11 days and posted gains only for one day in the past 12 days.

Very clearly, the futile attempt to breach the 1,800 points psychological barrier on Sept 13, had brought about a sizeable negative impact on the market, exacerbated by increasing geopolitical tensions in the Korean Peninsula and funds moving back to the developed economy betting on a rate hike.

The absence of “window dressing” activity or book-squaring for the third quarter by fund managers and the depreciation of the ringgit against the greenback, also were not helping the local sentiment.

Generally, the rising interest rate is not good for risky asset, such as equities and if investors continue to fret on this matter and remain nervous about tensions on the Korean Peninsula, it may result in the FBM KLCI breaking down from the 1,750 points concrete floor going forward.

Technically, the daily and weekly moving average convergence/divergence histogram are sending out a negative signal, but other indicators such as the daily slow-stochastic momentum index and the 14-day relative strength index are screaming an oversold condition, implying that a relief recovery is due.

To the upside, the FBM KLCI is expected to face a great challenge at 1,800 points.

In the case of a breakdown from the 1,750 points, the lowest 200-day simple moving average, resting at the 1,735 points and the 1,700 points level, will become vulnerable.

Read more at http://www.thestar.com.my/business/business-news/2017/09/30/market-risks-breaking-down/#HkUl6UHtoLdTERuS.99

Stocks With Momentum

Carimin, Hubline, Icon, Alam, Bright, Frontken, SHL

theedgemarkets.com highlighted seven stocks with momentum at Bursa Malaysia’s afternoon market close today. It showed three with positive momentum and four with negative momentum.

Stocks with positive momentum were:

Carimin Petroleum Bhd – up three sen at 58 sen

Hubline Group Bhd – up 0.5 sen at 10.5 sen

Icon Offshore Bhd – up one sen at 31.5 sen

Stocks with negative momentum were:

Alam Maritim Resources Bhd – down 0.5 sen at 22.5 sen

Bright Packaging Industry Bhd – up 0.5 sen at 27.5 sen

Frontken Corp Bhd – up two sen at 41.5 sen

SHL Consolidated Bhd – down two sen at RM2.82

The list of stocks with momentum is generated using a proprietary mathematical algorithm highlighting stocks with a build-up in trading volume and price. The algorithm differentiates between stocks that exhibit positive (+ve) momentum and negative (-ve) momentum. 

This list is not a buy or sell recommendation. It merely tells you which stocks are seeing higher than normal volume and price movements. 

The share price may move up or down from this point. But the “+ve” (suggesting a rising price trend on volume) and “-ve” (suggesting a falling price trend on volume) indicators should give readers a better idea of what the market is buying and when to sell.  Note also that momentum generally only persists for a short period of time.

However, each stock has an accompanying fundamental score and valuation score to help readers evaluate the attractiveness of the stocks, if they want to ride the momentum.

Bursa Malaysia Stock Market May Come Under Pressure

Riding on the strength of an overwhelmingly bullish Wall Street the previous Friday, Asian markets shrugged off geopolitical tensions in the Korean Peninsula and steadied on renewed buying momentum at the start of the week.

South Korea led way in the region, with the Kospi Index spiking a hefty 1.4% while the Japanese market was shut for a public holiday.
In an unprecedented move, Bursa Malaysia had a muted response, with the FTSE Bursa Malaysia KL Composite Index (FBM KLCI) dropping 3.4 points to 1,782.93.

Though the market made several attemps to climb higher during the day, it was not successful, as profit-taking selling in the quality issues was a drag.

At the final bell, the key index eased 2.67 points to 1,783.66 on Monday. The next day on Wall Street, the Dow had a record finish for the fifth consecutive session while the S&P set an all-time high for the second day in a row, led by banking shares.

But oil prices were barely changed amid worries about a built up in crude stockpiles.

In the region, with the exception of Japanese equities, which rallied nearly 2% on resumption of business after the long weekend, most markets slipped as investors moved to the sidelines ahead of a two-day US Federal Open Market Committee meeting.

On the domestic front, the local bourse mirrored the Asian peers and slide deeper into the negative zones on lack of support from investors.

Meanwhile, a weaker ringgit against the greenback weighed on the local sentiment.

As usual, blue chips topped the losers board on foreign selling. Elsewhere, most second and lower liners also struggled, with retail players heading to the sidelines.

In lacklustre trade, the FBM KLCI slide from an intra-day peak of 1,783.68 in early business to a low of 1,775.30 in late session before trimming losses slightly to close down seven points at 1,776.66 on Tuesday.

Thereafter, the bulls on Wall Street continued to set a series of records, boosted by a rally in financial stocks but in Asia, shares turned mixed to marginally lower in cautious mood as investors awaited signals from the US Federal Reserve policy meting on when it will hike rates again and start shrinking its balance sheet.

Pending a clearer picture to emerge, the local bourse stayed in correction mode due to limited support from the big boys while the retail investors remained on the sidelines.

In subdued session, the key index tested the downside of 1,770 points in late trade before bouncing off slightly to end 3.08 points lower at 1,773.58 on Wednesday.

As expected, the Fed left interest rates unchanged after a two-day meeting and although the Dow sustained rally into the uncharted territory and most regional markets firmed Bursa Malaysia extended the consolidation process, as jittery investors fret about the possibility of one more US interest rate hike by the end of the year and the withdrawal of about US$4.2 trillion in holdings of US Treasury bonds and mortgage-backed securities.

Petronas Gas and British American Tobacco topped declines, dragging the FBM KLCI down 2.54 points to 1,771.04 in another lacklustre session on Thursday.

Bursa Malaysia was shut for a public holiday yesterday.

Statistics: Week-on-week, the bellwether FBM KLCI skidded 15.29 points, or 0.9%, to 1,771.04 on Thursday, versus 1,786.33 on Sept 15. Turnover for the four-day holiday-curtailed week amounted to 10.402 billion units valued at RM8.329bil, compared with 13.126 billion shares worth RM10.766bil done during the previous regular week.

Outlook: Bursa Malaysia was in a correction mode the past week, with the FBM KLCI pulling further away from the recent three-month peak, as a futile attempt to penetrate the 1,800-point psychological barrier a week ago prompted investors to take some money off the table.

The more-hawkish-than-expected tone from Janet Yellen at the latest policy meeting and the plans to begin the unwinding of a decade of aggressive monetary stimulus added to the downbeat mood.

While a rate hike in the US is negative for risky assets, the Fed’s tightening plan may lead to capital outflows from the region and Malaysia may not be spared.

Combined with the latest move from US President Donald Trump ordering new sanctions on North Korea, tensions in the Korean Peninsula is likely to ratchet up and put more investors on the defensive mode.

In the absence of buying incentives on the horizon, the local bourse will probably extend the correction phase this week.

Based on the daily chart, the key index was only maintaining a slim three-point margin above the nine-month-old ascending trendline, resting approximately at 1,768 points. A breakdown from this trendline, if it happens, may see the FBM KLCI falling towards the 1,750-point floor on persistent liquidation.

Technically, indicators are looking very good too. While the weekly moving average convergence/divergence (MACD) histogram resumed the downward expansion against the weekly trigger line to retain the bearish signal, the daily MACD issued a sell call during intra-week trading, implying the local bourse is expected to be under pressure until a fresh bout of buying interest emerges.

Read more at http://www.thestar.com.my/business/business-news/2017/09/23/bursa-may-come-under-pressure/#JvJs9oWy8Ejh8qB0.99