Market Preview KLCI to tread cautiously ahead of UK referendum, next hurdle at 1,642

by **Cals** Fri 24 Jun 2016, 04:07

Market Preview

[size=28]KLCI to tread cautiously ahead of UK referendum, next hurdle at 1,642

By Surin Murugiah / theedgemarkets.com | June 23, 2016 : 6:05 AM MYT

KUALA LUMPUR (June 23): The FBM KLCI is expected to tread cautiously today in line with the mixed overnight close at most global markets with the next hurdle seen at 1,642 points, ahead of the referendum in Britain to decide whether it remains in the European Union, which has kept investors on tenterhooks.

Global markets traded cautiously on Wednesday, a day before the United Kingdom votes on whether to stay in the EU, with Wall Street stocks easing lower and sterling inching up, according to Reuters.

Oil fell back below $50 per barrel and the yen was down against the dollar, with the latest polls showing a slight tilt towards leaving the European Union when Britons go to the polls on Thursday, it said.

AllianceDBS Research in its evening edition Tuesday said that following the near day’s high up close in the preceding day, the FBM KLCI had on June 21 crossed over the 1,635 hurdle to settle at the day’s high of 1,637.69 in the last few minutes buying of selective blue chip stocks (up 3.46 or 0.21%).

The research house said that in the broader market, gainers outnumbered losers with 371 stocks ending higher and 370 stocks finishing lower.

“That gave a market breadth of 1.002 indicating the bulls were marginally in better control with the bears closely matched,” it said.

AllianceDBS Research said the market saw another day of buying support with last few minutes buying of selective blue chip stocks that lifted the index above the 1,635 with a day’s high settlement of 1,637.69.

“A closer study of the way this market carried itself on June 21 indicated that many market participants were still not willing to buy aggressively into the market at this juncture.

“What we saw in the last 3 days were believed to be a reaction to the recent market decline from the high of 1,664 (June 9) to the low of 1,613 (June 16).

“While the 1,637.69 settlement may have placed the market in a convenient position to test higher ground again, the crossover of 1,635 was not convincing at all due to indecisive buying supports,” it said.

The research house said thus, the underlying market strength remains on the weak side and is expected to move between 1,635 and 1,611 in the coming few days.

It said a decisive crossover of 1,635 should see a test of next hurdle at 1,642, adding that indicator wise, the MACD is above the 9-day moving average line.

“The analysis of overall market action on June 21 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,637.69 level on June 23,” said AllianceDBS Research.

Based on corporate announcements and news flow Tuesday, companies that may be in focus today could include: RHB Capita; Bhd, AirAsia Bhd, Felda Global Ventures Holdings Bhd, Sona Petroleum Bhd and Oriental Holdings Bhd.

Meanwhile, plantation-related stocks may attract some trading interest today after France's National Assembly on Wednesday scrapped plans for an additional tax on palm oil, which had raised an outcry in producer countries, after the government said it would propose a new tax scheme for vegetable oils used in food.
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