Technical | Fundamental Analysis Discussion Stocks Listed In Bursa

Monday, January 19, 2009

Chartroom Spectrum

Chartroom Spectrum By ZHUGE LIANG

What happened over the past fortnight could be an indication on what would be in store for global equities for the rest of the year. Just into the first half month of 2009, share prices around the world have already seen wild gyrations from one timeframe to the next. After staging a positive start to the year, many stock
exchanges across the region gave back their initial gains last week. The steepest weekly losses were registered by Hong Kong (-7.8%), China shares listed in Hong Kong (-7.5%) and Japan (-6.9%) as seven of the 11 Asian markets that we track showed negative year-to-date returns now.

The seesaw performance was also apparent on our Malaysian bourse. Its benchmark Kuala Lumpur Composite Index (KLCI) fell on four of the five days to post a cumulative drop of 22.6-points or 2.5% for the week. At a close of 896.47, the KLCI is still treading in positive territory (up marginally by 2.2% so far this year). However, beneath the top liners, the picture was less rosy: the FBM Second Board Index was up 0.5% last week but down 0.1% year-to-date while the FBM Mesdaq Index lost 2.7% last week (translating to a year-to-date change of minus 1.4%). Daily average volume, meanwhile, slowed to 538.8m shares valued at
RM674.3m (from 632.3m units worth RM891.6m the week before)..

There will be no lack of events to drive stock markets, here as well as overseas, in the coming fortnight. On the external front, all eyes will be on the inauguration of a new U.S. president on Tuesday (20 Jan). From the investors’ perspective, their thoughts will be on whether his action plans (announced and to be announced)
are enough to overturn the ailing fortunes of the world’s biggest economy after he assumes power. Their focus will also be on what more the new U.S. administration can do following the proposal to undertake aggressive pump priming measures on a mind-boggling scale, whose effectiveness will only be known upon subsequent implementation.

The fiscal stimulus tool (in the form of public spending, tax cuts etc), nevertheless, seems to be the better option for now when compared to the monetary policy. This comes as the U.S. Federal Open Market Committee (FOMC) is set to meet next Tuesday and Wednesday (27-28 Jan). With less flexibility in hand after cutting its benchmark federal funds rate to near zero already, the policymakers are expected to reaffirm its intention to pursue quantitative easing and support the functioning of credit markets, while providing an update on the macroeconomic developments.

Prior to the FOMC gathering, our Bank Negara Malaysia will decide on Wednesday (21 Jan) whether to adjust its overnight policy rate. While the expectation is for the central bank to lower the rate to stimulate economy activity amid a faltering outlook, it remains to be seen if they will do so as soon as in the upcoming meeting (after the 0.25% cut in Nov). Other economic reports due include the Consumer Price Index for Dec (this Wednesday, 21 Jan) and the international reserves as at 15 Jan (this Thursday, 22 Jan). Separately, the corporate earnings season will be underway with the likes of Tenaga (today) and Public Bank (around midweek)
scheduled to publish their latest quarterly report cards ahead.

On the Malaysian stock exchange, as the Earth Rat makes way for the Earth Ox to moo in on 26 Jan, investors may want to be on the sidelines in the run-up to the extended Chinese New Year break given the wobbly overseas markets. Talking about Chinese New Year traditions, the celestial readings say the Year of the Earth Ox will likely see a slow stock market as the ongoing adjustments for past excesses stretch on with bumpy rides along the way.


Technically, the KLCI – which has retreated from a recent high of 936.63 to mark its first decline in three weeks – is expected to show further weaknesses ahead. On the verge of slipping back into its negative sloping channel, we reckon the key market barometer appears susceptible to crack below its immediate support level of 890 anytime soon. If so, the return of fresh selling interest may then push the KLCI towards its next support line of 860. On the upside, a resistance barrier is seen at 930



If you like the post, please subscribe to Bursa Chat. We will send you the latest post by Email
===> Click
Subscribe to Bursa Chat by Email


No comments:

For New UBER users, Get RM15 off