PP 7767/09/2011(028730)

RHB Research

Malaysia
Technical Research Institute Sdn Bhd
A member of the
8 RHB Banking Group
Company No: 233327 -M

Dail y Trad ing St rat eg y

MARKET DATELINE 20 October 2010
Market Technical Reading
Tracking The Regional Volatile Sentiment...

Chart 1: FBM KLCI Daily Chart 2: FBM KLCI Intraday

Local Market Leads:

♦ Share price in Bursa Malaysia closed higher yesterday, as investors turned to bargain-buying mode following the
US markets’ gains overnight.

♦ The benchmark FBM KLCI surged higher in early trading, but the mid-day profit-taking pressure dragged the index
lower. The late trading, however, lifted it again towards a close near the day’s high of 1,488.77.

♦ Banking and Plantation stocks like Maybank (+6sen), RHBCap (+18en), Sime (+6sen) and IOICorp (+4sen) were
amongst the main contridutors to the index’s gain of 7.95 pts or 0.54% to 1,488.65.

♦ In the regional front, China’s markets closed firmly higher with SHComp and HSI gaining 1.58% and 1.25%
respectively, while FTSTI closed with a 0.35% gain for the day.

♦ Overall turnover rose further to 1.5bn shares from 1.33bn shares a day ago, and market breadth turned back to
the positive zone with 438 gainers leading 369 losers.

Technical Interpretations:

♦ Based on yesterday’s gain, the FBM KLCI registered a “positive harami” candle, following the previous bearish
candle. This suggests a slowdown in the recent selling pressure and a potential reversal ahead.

♦ As the index rebounded back to above the 10-day SMA of 1,487, it could revise the recent sell mode if it manages
to sustain at above the SMA today.

♦ Added with a mild recovery on the 14-day RSI, there is a chance for the index to end the profit-taking leg and
resume its previous rally in the near term.

♦ Now, its immediate support is at the 10-day SMA and a technical gap near 1,472.32 - 1,476.05.

♦ To resume its bullish chart sentiment, it needs to overcome the recent high of 1,503.82 with sustainable volume
and momentum.
Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Yesterday’s recovery was indeed in line with our earlier expectation, as we have anticipated bargain-hunting
activities to return after the selldown following the uninspired 2011 Budget announcement on last Friday.

♦ In fact, the improvement on the daily turnover suggests that the underlying trading sentiment remains strong.

♦ As a result, should the index sustain at above the 10-day SMA of 1,487 today, it will accelerate its upward
momentum and resumed its bullish short-term outlook once it removes the recent high of 1,503.82. Further
resistance level is at 1,524.69, i.e. at the all-time high level.

♦ However, given the surprise interest rates hike by the Chinese government yesterday, prompting the US markets
to end steeply lower in the overnight trading, the regional markets performance is expected to dictate the local
market direction in the immediate term, in our view.

♦ Nevertheless, we see the medium-term support at the 1,450 level and the 40-day SMA near 1,455. Without
breaching these levels, the medium- to long-term view of the FBM KLCI will stay positive.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 13 Oct 14 Oct 15 Oct 18 Oct 19 Oct Local Key Indices Closing
(Pts) (%)
Gainers 576 348 324 299 438 FBM KLCI 1,488.65 7.95 0.5
Losers 236 455 405 468 369 FBM 100 9,809.96 51.11 0.5
Unchanged 356 302 341 298 276 FBM ACE 4,184.94 18.61 0.4
Untraded 296 260 296 306 288 Major Overseas
Indices
Market Cap Dow Jones 10,978.62 -165.07 -1.5
Turnover Nasdaq 2,436.95 -43.71 -1.8
(mln shares) 1,200 1,274 1,021 1,331 1,500 S&P 500 1,165.90 -18.81 -1.6
Value FTSE 5,703.89 -38.63 -0.7
(RM mln) 2,027 2,042 1,647 1,610 1,820 Hang Seng 23,763.73 294.35 1.3
Jakarta Composite 3,592.79 25.87 0.7
Currency Nikkei 225 9,539.45 40.96 0.4
MYR vs US Seoul Composite 1,857.32 -18.10 -1.0
Dollar 3.0925 3.0820 3.0800 3.1005 3.1070 Shanghai Composite 3,001.85 46.62 1.6
SET 989.27 5.24 0.5
Source: RHBInvest & Bloomberg Straits Times 3,192.29 11.02 0.3
Taiwan Weighted 8,046.23 -14.31 -0.2
India Sensex 19,983.13 -185.76 -0.9
Major Commodities
NYMEX Crude Oil
(US$/barrel) 79.49 -3.35 -4.0
FCPO – Third Month
(RM/metric ton) 2,919.00 30.00 1.0
US Interest Rate Current Last Updated
21 Sep
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 2-3 Nov 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Sentiment in the local futures market improved significantly as traders turned bullish following a firm closing in the
overnight US markets.

♦ The FKLI for Oct contract closed positively at 1,490, up 14 pts or 0.95% for the day.

♦ On the chart, it registered a bullish candle, to reverse Monday’s fall to below the 10-day SMA near 1,485 with a
bearish candle.

♦ With the closing, short-term sentiment returned to positive, as it has secured back to above the 10-day SMA.

♦ Yesterday’s performance also prompted the momentum indicators to turn upward, indicating a potential technical
rebound underway.

♦ Should the buying momentum improve further, the FKLI may retest the recent high of 1,501 soon.

♦ Positively, a removal of the recent high will resume the previous uptrend and call an end to the recent profit-taking
dips. Further resistance is seen at 1,536, all-time high level.

♦ The FKLI will continue to be supported by the 40-day SMA of 1,455 and the key technical support level at 1,450 in
the medium-term outlook.

Daily Trading Strategy:

♦ The reversal to above the 10-day SMA has changed the technical outlook on the futures index back to the positive
zone.

♦ Traders can expect a retest of the 1,501 high soon if momentum improves further today. Turn more bullish if it
removes the hurdle.

♦ The trading range for the FKLI should be around 1,479 to 1,500 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Oct 10 1479.00 1492.00 1479.00 1490.00 14.00 1490.00 6916 21030
Nov 10 1481.00 1492.00 1481.00 1490.50 13.50 1490.50 784 480
Dec 10 1483.00 1492.00 1482.00 1492.00 15.00 1490.00 116 373
Mar 11 1482.00 1492.50 1482.00 1492.50 15.50 1491.50 11 129

Source: Bursa Malaysia

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Chart 5: US Dow Jones Industrial Average (DJIA) Daily Chart 6: US Nasdaq Composite Daily

US Market Leads:

♦ Overnight Wall Street slumped at least 1.5%, knocking down by a surprise interest rate hike in China as well as
the deepening worries over the banking sector’s mortgage woes.

♦ From the early trading, news that China announced a 25 bps hike on the one-year lending and deposit rates has
unnerved investors, as the tightening move came unexpectedly.

♦ In fact, selling pressure intensified further in the afternoon after news reported that PIMCO, BlackRock and the
New York Federal Reserve Bank joined hands to force Bank of America to buy back US$47bn mortgage bonds.

♦ Not helping too, the disappointing earnings from Apple’s (-2.7%) iPad sales have dampened sentiment further.

♦ As a result, there was broad-based selling in stocks and commodities, while the greenback rebounded. The US
light sweet crude oil futures for Nov delivery broke below the US$80 psychological level, slumping US$3.59 or
4.3% to US$79.49/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ As sellers unexpectedly returned in a big way, the DJIA took a sharp bearish reversal by stumbling 165.07 pts or
1.48% to 10,978.62 on Tuesday.

♦ By losing the 11,000 psychological level with a huge bearish candle, this points to a further selldown ahead.

♦ Technically, without any quick recovery to above 11,000, we expect the Dow to retest the short-term support at
the 21-day SMA of 10,911 and the key breakout point of 10,850 soon.

♦ Critically, it must defend above 10,850 to prevent steeper selling momentum. Otherwise, the recent uptrend will
be in jeopardy with lower trading range of 10,150 – 10,850 in the near future.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index suffered a surprise setback with a 43.71 pts or 1.76% loss to 2,436.95 on Tuesday.

♦ Though an “inverted hammer-like” candle indicates a possible rebound, the fallout from 2,470 and the downtick
in both short-term momentum indicators show that the recent chart breakout from 2,470 might be be confirmed.

♦ Hence, unless 2,470 can be recaptured in the immediate term to resume its rally, we are of the view that a
further pullback towards the 21-day SMA of 2,393 could be underway. The next key support is 2,330.

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Daily Technical Watch:

Chart 7: KHSB Daily Chart 8: KHSB Intraday

Kumpulan Hartanah Selangor (6246)

Strong support at the 10-day and 40-day SMAs near RM0.39 – RM0.40…

♦ After hitting a high of RM0.69 in Jun 2009, the share price of KHSB turned into a consolidation mode.

♦ Though it mamaged to trigger a technical rebound from RM0.40 to a high of RM0.575 in Dec 2009 - Jan 2010, it
remained trapped in a firm downtrend.

♦ Subsequently, the stock floored at a low of RM0.35 in late May 2010.

♦ However, shortly afterward, the stock recovered and stayed within a range from RM0.38 to RM0.44 region.

♦ Beginning from a rebound in early Sep 2010 from the support of RM0.38, the stock’s technical outlook has slowly
turned positive and its 10-day SMA has cut to above the 40-day SMA to suggest a positive medium-term outlook
ahead.

♦ Although it closed with an uninspired candle yesterday and the momentum indicators closed mix, downside is
expected to be minimal.

♦ We see strong support near the 10-day and 40-day SMAs at the RM0.39 - RM0.40 region, followed by a firmer
level at the range support of RM0.38.

♦ On the upside, the stock is expected to meet with the range resistance at RM0.44 soon, before staging a breakout
rally towards the RM0.54 resistance.

Technical Readings:

♦ 10-day SMA: RM0.403

♦ 40-day SMA: RM0.3936

♦ Support: IS = RM0.38 S1 = RM0.33

♦ Resistance: IR = RM0.44 R1 = RM0.54 R2 = RM0.60

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IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank Berhad
(previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may be permitted by applicable law. The
opinions and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or
be contrary to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be
construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any
manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons
may from time to time have an interest in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives
of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate
particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or
strategy will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents accepts
any liability for any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing
investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of the RHB
Group may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity
securities or loans of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other
services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

Technical recommendation framework for stocks and sectors are as follows: -

Technical Recommendation:
Trading Buy = Short-term positive opportunity spotted. It is an aggressive trading recommendation with a book to sellers’ price for short-term technical upside.
Bargain Buy = Short-term positive but technical signals have yet to trigger a rally. Traders can park and queue for their desired entry level within a small range.
Buy on Weakness = Short- to Medium-term positiveness anticipated, but technical readings are still negative. Traders can pick-up the stock for future rally.
Sell on Strength = Short-term momentum still positive, Traders are advice to lock in profit base on current strength.
Take Profit = Short-term target achieved. Traders are advice to exit before the technical readings turn bearish.
Avoid = Risky situation in the short-term and high volatility expected on the share price. Traders’ best strategy is staying away until it stabilises.

Technical Time Frame:

Immediate-term = short time frame within a contra period.
Short-term = moderate time frame within two to three contra periods. For tracking purposes, we refer to 10 trading days.
Medium-term = medium time frame usually refers to two to three weeks period. For tracking purposes, we refer to 20 trading days.

Technical recommendations are generally short-term in nature and may differ from RHBRI’s equity fundamental view and recommendation on the same company.

RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended
securities, subject to the duties of confidentiality, will be made available upon request.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for the
actions of third parties in this respect.

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