BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Hong Leong Investment Bank Research
After soaring 28 points in April, will the adage “sell in May and go away” likely apply to this year?
To recap, KLCI experienced an average -0.7% return in May with 12 declines versus eight gains for the past 20 years.
Current weak technical posture and failure to stage a successful breakout above the downtrend resistance may see the index remaining choppy during this May reporting season as potential wave 4 COVID-19 infection in Malaysia raised concerns over the re-introduction of movement control order (MCOs) and more economic pains.
Key supports are pegged at 1,585-1,577-1,564 zones.
On stock selection, Bumi Armada Bhd is currently trading at undemanding FY2021/2022 price-to-earnings ratio (PE) of 5.3/5.3 times supported by strong earnings visibility as its FPSO (floating production storage and offloading) contract values are not linked to the fluctuations in oil prices.
Technically, the stock may stage a downtrend reversal soon in anticipation of a falling wedge formation. A strong breakout above downtrend channel at 41 sen will lift prices higher towards 43-46-48 sen while supports fall on 39-38.5-36.5 sen levels.
Malacca Securities Research
The FBM KLCI stayed on a downbeat note despite solid expansion of Malaysia’s PMI in April as the key index succumbed to selling in most index components, led by PETDAG and glove heavyweights.
The key index is likely to trade in consolidation over the near term as investors’ are still cautious switching among recovery and healthcare-related stocks.
Commodities-wise, crude palm oil (CPO) price jumped around 5.0% to close above the RM4,000 level, while tin futures are at another record high position.
On a side note, according to Intel’s CEO, the global chip shortages situation may not resolve anytime soon.
The FBM KLCI slipped below the 1,600 psychological level to close below the EMA 20 level as investors’ sentiment remained cautious.
Technical indicators remained negative as the MACD Histogram has extended a red bar, while the RSI was hovering below the 50 level.
Should bargain hunting activities emerge, the key index may trend towards the 1,600 level again, with next resistance pegged around 1,615-1,635; support is set at 1,565. – May 4, 2021