Retail Research

PP 9484/12/2012 (031413)

Traders Brief
7 September 20122012 September 7,

Technical rebound in the offing but sustainability in question

Bursa Recap KLCI plunges 1.4% to a 3-month low After recent selldown, Asian stocks were generally higher on technical rebound on hopes that the ECB will unveil new tactics to curb surging borrowing costs in indebted euro zone states. Against regional markets recovery, KLCI tumbled 1.4% or 23 pts to 1618 on panic selling after S&P said it may cut Malaysia's sovereign credit rating if the government did not deliver promised reforms to cut spending to reduce its fiscal deficits. Sentiment was also dampened by the weak CY2Q12 results th season and rising election risks amid speculation that the 13 general election could be held as early as Nov 2012. Dow surges 1.9% to 13292, the highest since Dec 97 The Dow rallied 1.9% or 245 pts to 13292 after European Central Bank President Mario Draghi followed up on his promise to protect the euro and outlined a large bond-buying plan. Sentiment was also boosted by positive ISM services index and ADP job data coupled with lower weekly jobless claims, ahead of the crucial nonfarm payroll report tonight. Technical rebound in the offing but sustainability in question After climbing to all time high at 1655.5 on 3 Sep, KLCI nosedived 2.5% to a low of 1613.2 before ending at 1618 yesterday. In the wake of overnight bullish markets on Wall St and Europe, KLCI may stage a technical rebound today amid grossly oversold hourly technicals (refer FIG1). Nevertheless, further rebound sustainability will fizzle off if the 1633-1641 gap is not filled up in the next few days. Strong resistance levels are 1647 (14-d SMA) and 1655. Following the violation of short term support near 14-w SMA, there could be further downside risks if the immediate supports at 1606 (61.8% FR and 20-w SMA) and 1600 psychological mark are violated. A breakdown below 1600 will drive the KLCI lower towards 1591 (50% FR) and 1576 (38.2% FR). For the next few days, volatility is on the horizon ahead of the major upcoming event risks i.e. U.S. payroll report (7 Sep), German constitutional court decision on the ESM (12 Sep) and FOMC meeting (12-13 Sep). We see trading opportunities following a 2-day slump of 36 pts. FIG5 shows a list of stocks for potential rebound based on technical (with their corresponding support and resistance levels as well as cut loss level). Nevertheless, we would like to caution investors that current rebound may be short-lived (taking cues from overseas) and investors are advised to capitalize on any rallies to take profits when KLCI rebounds towards 1650-1655 targets. Should the rebound fail, keep a close watch on the stop loss levels.

Low Yee Huap, CFA yhlow@hlib.hongleong.com.my 03-21681078 FBM KLCI Overall market volume (shares) Overall market value (RM) 1618.0 1.30bn 1.99bn

Daily trading participation (value) 6 Sep Local retail RM0.36bn (17.94%) Local institution RM1.15bn (57.92%) Foreign RM0.48bn (24.14%) 5-days Trading Participation (%) 29-Aug 30-Aug 3-Sep 4-Sep Local retail 21.6 17.7 19.3 18.0 Local inst. 55.7 47.1 45.7 58.5 Foreign 22.7 35.3 35.0 23.5 Bursa Global Index Summary
Close KLCI ASX DAX STI HSI INDU JCI KOSPI NIKKEI SENSEX SET SHCOMP 1,618 4,313 7,167 2,989 19,209 13,292 4,103 1,881 8,681 17,346 1,244 2,052 Daily 12 12 (%) P/B (x) P/E (x) -1.4 2.14 15 0.8 1.62 13 2.9 1.32 11 -0.2 1.33 14 0.3 1.26 10 1.9 2.60 13 0.7 2.84 15 0.4 1.10 10 0.0 1.05 14 0.2 2.27 14 0.8 2.10 14 0.7 1.36 9 YTD (%) 5.7 6.3 21.5 13.0 4.2 8.8 7.3 3.0 2.7 12.2 21.3 -6.7

Dow Jones Recap

5-Sep 18.5 52.1 29.4

FBM KLCI outlook

Major currencies Close Daily (%) AUD/RM EUR/RM EUR/USD HKD100/RM JPY/RM SGD/RM USD/JPY USD/RM Bloomberg Commodities Close Daily (%) YTD (%)
Baltic Dry (pts) Copper (US$/lb) CPO (RM/MT) Crude Oil (US$/barrel) DRAM (TW$) Gold (US$/ounce) Soy Bean (US$/bushel) 675.0 352.4 2,948.0 94.8 3,170.5 1,700.1 1,744.5 (1.3) (0.2) (1.4) (0.8) (0.4) (0.0) 0.0 (61.2) 2.5 (7.1) (4.1) 5.7 8.7 45.6 3.192 3.932 1.263 40.190 3.951 2.503 78.890 3.117 0.5 0.7 0.0 0.0 (0.0) 0.0 0.0 (0.1)

YTD (%)
(1.3) (4.0) (2.5) (1.5) (4.1) 2.4 2.6 (1.6)

Bloomberg

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FIG1 HOURLY KLCI: TECHNICAL REBOUND AMID GROSSLY OVERSOLD TECHNICALS

Source: HLebroking

FIG2 DAILY KLCI: DOWNSIDE BIAS ON BEARISH TECHNICALS AFTER RECENT SELLDOWN

Source: HLebroking

FIG3 WEEKLY KLCI: KEY UPTREND SUPPORT BROKEN

Source: HLebroking
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FIG4: DAILY DOW- TECHNICALS TURN MORE SUPPORTIVE TO RETEST 13300-13500 LEVELS

Source: Stockcharts

FIG4 : TECHNICAL REBOUND PLAY

Stocks Prcie (RM) 1.380 0.985 1.430 2.400 2.420 8.700 1.100 3.380 2.250 4.050 7.540 6.700 9.000 52W High (RM) MAYBULK JCY GTRONIC JTIASA DRBHCOM GENTING MBL AIRASIA MBSB AFG CIMB TENAGA MAYBANK 2.73 1.65 2.03 3.38 3.26 11.32 1.32 4.00 2.54 4.41 7.96 7.01 9.25 52W Low (RM) 1.370 0.385 1.190 1.520 1.670 8.370 0.545 2.680 1.170 3.020 6.560 4.890 7.350 -49.5% -40.3% -29.6% -29.0% -25.8% -23.1% -16.7% -15.5% -11.4% -8.2% -5.3% -4.4% -2.7% 0.7% 155.8% 20.2% 57.9% 44.9% 3.9% 101.8% 26.1% 92.3% 34.1% 14.9% 37.0% 22.4% Chgs from 52w High Chgs from 52w Low Support S (RM) 1.30 0.93 1.35 2.35 2.33 8.60 1.05 3.30 2.19 3.95 7.39 6.50 8.87 Support S1 (RM) 1.25 0.87 1.30 2.26 2.23 8.50 1.00 3.20 2.10 3.85 7.45 6.60 8.75 Resistance R (RM) 1.48 1.07 1.50 2.52 2.55 8.90 1.15 3.50 2.33 4.15 7.67 6.80 9.15 Resistance R1 (RM) 1.53 1.17 1.55 2.62 2.60 9.00 1.21 3.57 2.41 4.23 7.81 6.90 9.25 1.28 0.85 1.28 0.58 2.30 8.45 0.98 3.18 2.08 3.84 7.35 6.48 8.70 Cut-loss RM

Source: Bloomberg, Bursa

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Disclaimer The information contained in this report is based on data obtained from sources believed to be reliable. However, the data and/or sources have not been independently verified and as such, no representation, express or implied, is made as to the accuracy, adequacy, completeness or reliability of the info or opinions in the report. Accordingly, neither Hong Leong Investment Bank Berhad nor any of its related companies and associates nor person connected to it accept any liability whatsoever for any direct, indirect or consequential losses (including loss of profits) or damages that may arise from the use or reliance on the info or opinions in this publication. Any information, opinions or recommendations contained herein are subject to change at any time without prior notice. Hong Leong Investment Bank Berhad has no obligation to update its opinion or the information in this report. Investors are advised to make their own independent evaluation of the info contained in this report and seek independent financial, legal or other advice regarding the appropriateness of investing in any securites or the investment strategies discussed or recommended in this report. Nothing in this report constitutes investment, legal, accounting or tax advice or a representation that any investment or strategy is suitable or appropriate to your individual circumstances or otherwise represent a personal recommndation to you. Under no circumstances should this report be considered as an offer to sell or a solicitation of any offer to buy any securities referred to herein. Hong Leong Investment Bank Berhad and its related companies, their associates, directors, connected parties and/or employeees may, from time to time, own, have positions or be materially interested in any securities mentioned herein or any securites related thereto, and may further act as market maker or have assumed underwriting commitment or deal with such securities and provide advisory, investment or other services for or do business with any companies or entities mentioned in this report. In reviewing the report, investors should be aware that any or all of the foregoing among other things, may give rise to real or potential conflict of interests. This research report is being supplied to you on a strictly confidential basis solely for your information and is made strictly on the basis that it will remain confidential. All materials presented in this report, unless specifically indicated otherwise, is under copyright to Hong Leong Investment Bank Berhad . This research report and its contents may not be reproduced, stored in a retrieval system, redistributed, transmitted or passed on, direclty or indirectly, to any person or published in whole or in part, or altered in any way, for any purpose. This report may provide the addresses of, or contain hyperlinks to, websites. Hong Leong Investment Bank Berhad takes no responsibility for the content contained therein. Such addresses or hyperlinks (including addresses or hyperlinks to Hong Leong Investment Bank Berhad own website material) are provided solely for your convenience. The information and the content of the linked site do not in any way form part of this report. Accessing such website or following such link through the report or Hong Leong Investment Bank Berhad website shall be at your own risk. 1. As of 7 September 2012, Hong Leong Investment Bank Berhad has proprietary interest in the following securities covered in this report: (a) -. 2. As of 7 September 2012, the analyst, Low Yee Huap CFA, who prepared this report, has interest in the following securities covered in this report: (a) -.
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Equity rating definitions

BUY TRADING BUY HOLD TRADING SELL SELL NOT RATED Positive recommendation of stock under coverage. Expected absolute return of more than +10% over 12-months, with low risk of sustained downside. Positive recommendation of stock not under coverage. Expected absolute return of more than +10% over 6-months. Situational or arbitrage trading opportunity. Neutral recommendation of stock under coverage. Expected absolute return between -10% and +10% over 12-months, with low risk of sustained downside. Negative recommendation of stock not under coverage. Expected absolute return of less than -10% over 6-months. Situational or arbitrage trading opportunity. Negative recommendation of stock under coverage. High risk of negative absolute return of more than -10% over 12-months. No research coverage, and report is intended purely for informational purposes.

Industry rating definitions

OVERWEIGHT NEUTRAL UNDERWEIGHT The sector, based on weighted market capitalization, is expected to have absolute return of more than +5% over 12-months. The sector, based on weighted market capitalization, is expected to have absolute return between 5% and +5% over 12-months. The sector, based on weighted market capitalization, is expected to have absolute return of less than 5% over 12-months.

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