9 January 2015

Retail Insights

Todays Highlights
Mounting concerns over the global growth outlooks provided a
gloomy backdrop for financial markets. It took some of the shine off
global data last week ie. very robust USA employment report and Europe
PMI manufacturing data.
Technically, most global indices retreat after improved market
sentiment last week. Malaysia is among laggards so do most oil
producers like Brazil, Canada, and Russia. Oil importers like China and
Japan hit three and seven year highs respectively.
Most foreign emerging market currencies fell as the USA Dollar hit a
new eight-year high. That was due mainly to a big jump in USA rates
following the strong jobs report. The main reason for dollar strength is the
growing discrepancy by rising U.S. interest rates and low foreign rates.

Summary
Stock Pick
Ticker

Last
Price*

Target
Price

WPRTS
GTRONICS
UNISEM
INARI
MYEG
JOBSTREET
AIRASIA
GAMUDA
ELSOFT

3.36
4.43
1.95
2.75
4.25
2.92
2.74
5.06
1.38

4.00
5.00
2.50
3.40
5.00
3.50
5.30
6.20
2.50

*As at the date of recommendation.

Ringgit is at the lowest level since 2008 and close below its 2009 and
2010 low. The move constitutes a major downside breakdown, completed
the toppish formation and signals the likely start of major downtrend in the
local currency.
FBMKLCI continues to be oversold and Technology is the week
strongest sector. It might be worth pointing out, however, that technology
stocks who are mostly exporters are one of those sectors that stand to
benefit from declining ringgit. Looking at the ultra low oscillators level such
as MACD, we reiterate our view that FBMKLCI is oversold and should see
some modest rebound.

Todays highlights
Mounting concerns over the
global growth. Most global
indices retreat. Ringgit at the
lowest since 2008. FBMKLCI
continues to be oversold.

Market Analysis
FBMKLCI
Bursa Malaysia Enters Medium
Term Bear Market
Medium Term Outlook
Down Trend just confirmed
Market Bias: Downward
Range: 1900 1700
Short Term Outlook
Down Trend remained
Market Bias: Downward
Range: 1860 - 1720

Strategy This Week

FBMKLCI anticipated to do a
corrective bounce
Bursa lags but to follow
regional leadership;
Positive data and dovish
ECB headlines;
Softer currencies across
the board;
Japan and China zoom
to multi month high on
the year end bullishness
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)

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9 January 2015

Market Analysis and Stock Pick

Stocks are selected based on technical analysis. Investors are advised to study the underlying fundamentals of each stock to assess
and match risks appetite. Stocks listed below are categorized as potentially high risks and may increase in volatility in the near future.

Norhashmilaidi Hashim, MFin

Vice President, Retail Research
+603 2145 9515
norhashmilaidi@affinhwang.com

Code/Bloomberg Ticker

Bursa Ticker

Mkt Cap (RM)

Support 1 (RM)

Resistance 1 (RM)

Last Price* (RM)

3-6 Month Target

Price (RM)

Expected Return

Featured Date

7155 mk equity

SKPRES

666.0

0.68

0.76

0.74

1.00

35.1%

2/12/2014

3158 mk equity

YNHPROP

883.0

2.00

2.11

2.08

2.50

20.2%

2/12/2014

5231 mk equity

PELIKAN

599.3

1.09

1.21

1.18

1.60

35.6%

2/12/2014

7036 mk equity

BORNOIL

141.9

0.78

0.91

0.86

1.15

34.5%

2/12/2014

1961 mk equity

IOICORP

30696.7

4.70

4.95

4.83

6.00

24.2%

2/12/2014

5657 mk equity

PARKSON

2620.5

2.60

2.56

2.39

2.90

21.3%

2/12/2014

5099 mk equity

AIRASIA

7759.2

2.45

2.86

2.79

3.30

18.3%

2/12/2014

5398 mk equity

GAMUDA

12131.2

4.80

5.30

5.22

6.20

18.8%

26/11/2014

0090 mk equity

ELSOFT

282.4

1.15

1.80

1.56

2.50

60.3%

26/11/2014

5246 mk equity

WPRTS

10639.2

3.00

3.15

3.12

3.50

12.2%

21/11/2014

7084 mk equity

QL

2878.8

3.40

3.50

3.46

4.00

15.6%

21/11/2014

0078 mk equity

GDEX

1811.6

2.00

2.25

2.16

2.80

29.6%

21/11/2014

0024 mk equity

JAG

207.3

0.20

0.23

0.22

0.35

59.1%

21/11/2014

7160 mk equity

PENTA

59.3

0.40

0.47

0.45

0.60

34.8%

21/11/2014

Note: * As at the date of recommendation.

Affin Hwang Investment Bank Bhd (14389-U) (Formerly known as HwangDBS Investment Bank Bhd)
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9 January 2015

FBMKLCI: Bursa Malaysia Enters Medium Term Bear Market

1

Long term EMA100w broken. Note that the FBMKLCI has convincingly breached below EMA100w at 1785
while EMA20w crossed below EMA50w indicating that Bursa Malaysia has entered into medium term Bear
Market. To reverse the bearish view the index has to surge and remain above 1830.

Direction: Sideways with downward bias. Supports: 1715, 1660 and 1614. Resistances: 1845, 1858 and 1880.

Bursa Malaysia enters bear market. As at Friday close, the FBMKLCIs EMA100d has crossed below
EMA200d, confirming that stocks in Bursa Malaysia have officially entered a Bear Market based on the daily
chart. Technical rebounds are possible but will highly likely to be short-lived as investors may continue lighten up
their exposure gradually.

Direction: Sideways with downward bias. Supports: 1736, 1716 and 1685. Resistances: 1790, 1800 and 1820.

Affin Hwang Investment Bank Bhd (14389-U)

(Formerly known as HwangDBS Investment Bank Bhd)

Page 3 of 13

9 January 2015

Trading Buy
WESTPORTS BHD (WPRT)
Our medium (3-6 months) term target price for WPRT is RM4.00 hence offers an upside potential of
around 19% from current level.

Affin Hwang Investment Bank Bhd (14389-U)

(Formerly known as HwangDBS Investment Bank Bhd)

Page 4 of 13

9 January 2015

Trading Buy
GLOBETRONICS BHD (GTRONIC)
Our medium (3-6 months) term target price for GTRONIC is RM5.00 hence offers an upside potential of
around 12.8% from current level.

Affin Hwang Investment Bank Bhd (14389-U)

(Formerly known as HwangDBS Investment Bank Bhd)

Page 5 of 13

9 January 2015

Trading Buy
UNISEM BHD (UNISEM)
Our medium (3-6 months) term target price for UNISEM is RM2.50 hence offers an upside potential of
around 31.5% from current level.

Affin Hwang Investment Bank Bhd (14389-U)

(Formerly known as HwangDBS Investment Bank Bhd)

Page 6 of 13

9 January 2015

Trading Buy
INARI BHD (INARI)
Our medium (3-6 months) term target price for INARI is RM3.40 hence offers an upside potential of
around 19.1% from current level.

Affin Hwang Investment Bank Bhd (14389-U)

(Formerly known as HwangDBS Investment Bank Bhd)

Page 7 of 13

9 January 2015

Trading Buy
MYEG BHD (MYEG)
Our medium (3-6 months) term target price for MYEG is RM5.00 hence offers an upside potential of
around 19.9% from current level.

Affin Hwang Investment Bank Bhd (14389-U)

(Formerly known as HwangDBS Investment Bank Bhd)

Page 8 of 13

9 January 2015

Trading Buy
JOBSTREET BHD (JOBST)
Our medium (3-6 months) term target price for JOBST is RM3.50 hence offers an upside potential of
around 20.3% from current level.

Affin Hwang Investment Bank Bhd (14389-U)

(Formerly known as HwangDBS Investment Bank Bhd)

Page 9 of 13

9 January 2015

Trading Buy
AIRASIA BHD (AIRASIA)
Our medium (3-6 months) term target price for AIRASIA is RM3.30 hence offers an upside potential of
around 20.4% from current level.

Affin Hwang Investment Bank Bhd (14389-U)

(Formerly known as HwangDBS Investment Bank Bhd)

Page 10 of 13

9 January 2015

Strategy This Week

OVERSOLD SITUATION, UPTICK GLOBAL DATA AND BARGAIN HUNTING OFFER BULLS EARLY
EDGE, TECHNICAL REBOUND ON THE CARDS
Following the mild strength of the global stocks, we expect the local index, FBMKLCI to eventually follow
other Asian markets and stage an oversold rebound (after declining 7.5% over the last four months due to
softening of ringgit & commodities). We believe the FBMKLCI is likely to have milder upside next week
(albeit with a more volatile session), tracking more bargain hunting rebound, growing fiscal stimulus hopes
(Europe, Japan and China), positive global economic data and upside swings of Wall Street and Asian
regional indices.
Both MSCI All-World and FTSE All-World have showed strong rebound after sitting near its lowest in a
year last month while the USA 10-year bond yields retreated after sitting at their highest levels in more
than two years. Positive global economic data (USD PMI, USD Non-Manufacturing PMI, Europe PMI,
Great Britain PMI, Australia Current Account, Australia Retail Sales) and attractive blue chips bargainhunting interest should give Bursa an opportunity to regain near term control. We believe the coincident
upturn in USA, China and Eurozone manufacturing PMIs (strongest since June 2013 possibly due to
corporate restocking) are encouraging and will provide short term lift to the broad market as investors
digest that global economic momentum is still robust this year.
While there was a measure of concern over USA Fed rising interest rates, the uptick in manufacturing
data helped temper outflows from Asian markets. The possibility that the USA central bank will start
reducing the supply of easy money has spread from equities to commodities and currencies market (from
yield curve steepening and investment outflows, commodities melt down to five year low), particularly
those emerging market nations that are oil and plantation exporters. This is reflected by the Malaysian
Ringgit, Russian Rouble, Brazilian Real and Indonesian rupiah which weakens to a new multi-year trough.
The sustainability of the oversold rebound will depend on further rounds of economic data next week
(GDP, Jobless claims, Consumer Confidence and Durable Goods Order) with investors looking for hints to
confirm a trend reversal of downside momentum.
Despite softer currencies, most Asian indices are in green territories with Japan Nikkei and China
Shanghai Composite pushed into a new high for the move, with support coming from slight improvement
in Japan/China service PMI figures and hopes for more stimulus from the People Bank of China.
Meanwhile, expectations that the ECB could be closer to pursuing a fresh round of quantitative easing
should provide support. USA equity markets were also bullish in anticipation of positive November
employment report and ISM manufacturing data. The local equity markets however failed to hold above
1750 support level despite hope for a positive December holiday sales period and further improvement in
upcoming year end shopping sentiment.
Meanwhile, a decent 7.5% correction in the local index from its record high of 8th July 2015, oversold
technical positioning and cheaper market valuations leave the index increasingly vulnerable for a quick
trading accumulation. Further strength above 1770 resistance would open the charts up for a larger rally
toward 1800 while a break down below 1730 will suggest more setbacks towards 1700 levels. On the
domestic front, we note that the local index has rallied to an all time-high of 1896.23 level in July but ever
since has been moving downwards until last week when it broke below the psychological threshold of
1800 points. Despite the foreign outflow and selloff seen in Bursa and Ringgit (-7.5% & -9.2%), local
market is still holding up largely due to Bursa defensive appeal, resilient current account surplus, higher
yield and its lower vulnerability to foreign investor withdrawals. We expect selling momentum to subside
riding on three factors (1) Bursa resilience and defensive appeal (as it did during the past global
uncertainties) (2) More rotation play towards small cap stocks as can be seen by the outperformance of

Affin Hwang Investment Bank Bhd (14389-U)

(Formerly known as HwangDBS Investment Bank Bhd)

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9 January 2015

FBMSmallCap and FBMFledgling Indices (3) Portfolio rebalancing with institutional funds positioning
ahead of the year end window dressing activities.
On the news front, there are plenty of business news which will catalyse Bursa market next week which
include Petronas delays go-ahead for USD11.0b Canadian LNG project, Kenanga arm sells stake in
Labuan bank for a total cash consideration of RM6.7m, Berjaya Land proposes to issue up to RM650.0m
debt notes, Hong Leong Bank redeems RM250 mil notes due in 2019, IOI Properties completes its South
Tower project in Singapore, Censof unit wins Talent Corp job, Malaysia 1MDB plans meetings with
investors for RM10b energy IPO, Sime disposes of stake in China unit and Hap Seng to unveil RM2b
mega property project in Klang Valley and Brahim's ties up with Carpenter Beef to develop halal abattoir in
Australia. On the technical front, despite the breakdown below 1800 psycho level, the FBMKLCI now
remains in a long term monthly uptrend (barring any close below 1700 level). Since hitting a new record
high in July (1826.22 points, a yearly gain of 8.9%), the local index has declined 7.5% which is an ideal
healthy correction for the strong uptrend seen since October 2008. Given the oversold market situation,
we expect the weakness to be temporarily stretched (Bursa has recorded five straight week of decline).
Various momentum studies (MACD, RSI and Stochastics) have been trending lower and remains oversold
which support a potential technical rebound near major support levels.
As for strategy next week, we are recommending aggressive investors to short index futures on strength
(near 1770 level, positioning for another test lower) while conservative investors should stick with blue
chips that possess resilient business models and momentum capacity to rebound on event play (Festive
Season & Budget 2015) after the recent sell-off. These include the likes of services, banks, technology
and consumers stocks such as Sime, Hapseng, Unisem, Airasia, Axiata, Digi, Tenaga, Maybank, TM,
MEGB, MBSB and Nestle.

Dato Dr. Nazri Khan Adam

Senior Associate Director
Head of Retail Research
+603 2145 9515
nazri.adam@affinhwang.com

Affin Hwang Investment Bank Bhd (14389-U)

(Formerly known as HwangDBS Investment Bank Bhd)

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9 January 2015

This report is intended for information purposes only and has been prepared by Affin Hwang Investment Bank Berhad (14389-U) (formerly known as HwangDBS Investment
Bank Berhad) (the Company) based on sources believed to be reliable. However, such sources have not been independently verified by the Company, and as such the
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Comments and recommendations stated here rely on the individual opinions of the ones providing these comments and recommendations. These opinions may not fit to your
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(formerly known as HwangDBS Investment Bank Berhad)
A Participating Organisation of Bursa Malaysia Securities Bhd
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Affin Hwang Investment Bank Bhd (14389-U)

(Formerly known as HwangDBS Investment Bank Bhd)

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