KLCI week ahead Global relief to push KLCI to end 2013 with a bang

by **Cals** Sun 29 Dec 2013, 23:34

KLCI week ahead Global relief to push KLCI to end 2013 with a bang

Business & Markets 2013

Written by Surin Murugiah of theedgemalaysia.com

Saturday, 28 December 2013 11:52

KUALA LUMPUR (Dec 28): The FBM KLCI is likely to cap 2013 on a high note on the back of improving global economic outlook after the bullish US Federal tapering announcement recently, as well as US lawmakers’ maneuvers to find common ground to keep the US economy on the mend.
However, there could be intermittent profit taking at the local bourse nest week in holiday shortened final trading week of 2013 after the FBM KLCI closed at a fresh record high last Friday.
Window dressing activities on the final two trading days of 2013 is likely to lend support and prop the benchmark index higher.
Affin IB vice president and head of retail research Dr Nazri Khan said that going forward, he expects Bursa to price-in global relief from bullish Fed tapering announcement and gradually extend its rally higher.
“While we expect some quick short term profit-taking at 1,850 resistance level (after 71 points or 3.99% the FBM KLCI gained over the last four weeks), eventually the local market will trend higher, pricing in reduced risk premium as some of the tapering uncertainty has finally been removed,” he said.
Nazri said that on the domestic front, he expects rising economic momentum to enter 2014 given the improved external situation, a series of government fiscal reforms, subsidy rationalisation, GST implementation and rescheduling of high import content projects to show positive results and improve Malaysia fundamentals.
He said that from cycle analysis, seasonal trends usually favoured a strong finish to the month of December with profit taking normally happen just before the Chinese New Year in late January.
“Overall, we expect the bull camp to maintain control riding on year-to-date-momentum
“The fact that the second half of December is usually strong also provides a bullish tailwind for Bursa which should carry into the New Year.
“Strategy-wise, traders should be more aggressive and perhaps should use any temporary volatility as opportunity to buy on dips. Aggressive bulls might consider buying FBMKLCI futures riding on trendline breaks above the week high of 1851 using the week's low of 1,834 as a cut-loss-price.
“Stock-wise, traders should accumulate resource stocks namely oil gas and plantation stocks which do well as external front improve and commodity recovers,” he said.
“Our top ten featured stocks for quick play next week include SKPetro, Dialog, Dayang, Yinson, Uzma, KL Kepong, Sarawak Oil Palm, Prestariang Berhad, PPB and TSH Resource Berhad,” added Nazri.