HDBSVR sees KLCI pulling back

by **hlk** Mon 04 Jun 2012, 13:21

KUALA LUMPUR: Hwang DBS Vickers Research (HDBSVR) said with overseas equities still under siege, chances are the FBM KLCI will pull back and make its way towards the support area of 1,530-1,555 soon.
It said on Monday the FBM KLCI chalked up a weekly gain of 22.5-points or 1.5% to close at 1,573.59 last Friday.
HDBSVR
said other market bellwethers -- the FBM 70 Index (+1.3%), the FBM
Small Cap Index (+0.9%) and the FBM ACE Index (-1.2%) -- saw mixed
fortunes during the week. Daily average trading volume and value were
860.5 million shares (from 869.1 million units) and RM1.4bil (RM1.2bil
before), respectively.
"Following a second straight week of
cumulative gains of 41.1-point, the FBM KLCI is now not far away
(-0.7%) from where it was (at 1,584.32) just before the market sell-off
three weeks ago.
"However, the recovery was laced with mixed
market breadth and light buying interest with the FBM 70 Index (-1.9%),
the FBM Small Cap Index (-5.0%) and the FBM ACE Index (-7.0%) still
hovering much lower than their corresponding levels back then," it said.
HDBSVR
said investors should also look the regional perspective. Even after
rebounding from their oversold positions, all stock barometers remain
deeply in the red. Since 11 May, across the region, the steepest losses
were recorded in Indonesia (-7.6%), Hong Kong (-7.0%) and Thailand
(-6.4%).
Over in the U.S., Wall Street's indices were down by between 5.5% and 6.4% in a space of three weeks.
"The
performance divergence between our local bourse and its regional peers
will not likely persist especially if there is a dearth of fresh buying
catalysts. For the coming week, investors will still be reacting to
alternating news flows from the eurozone in the run-up to Greece's June
17 elections. They may then overlook the slow stream of routine
domestic reports such as the April external trade data (due on
Wednesday).
"Technically speaking, we believe there is limited
upside potential for Malaysian equities, which could have already
peaked at 1,609.33 in early April. Further progress in the FBM KLCI may
be obstructed by resistance barriers of 1,580 (first) and 1,610
(second), respectively," it said.