BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Hong Leong Investment Bank Research
In this holiday-shortened week (Wesak Day holiday on May 26), the FBM KLCI may stage a technical rebound as a nationwide movement control order (MCO 3.0) total lockdown was not implemented while the government has pledged to expedite the National COVID-19 Immunisation Programme.
Nevertheless, with the index still trading below its 200-day SMA near 1,577, the trend for the short and medium terms are still consolidating sideways with lower supports at 1,552 (year-to-date low) and 1,545.
On the upside, a successful breakout above 1,577 would spur the benchmark towards stiff hurdles near 1,589-1,600 levels as investors digest the stricter MCO 3.0 and elevated COVID-19 infections locally.
On stock selection, after sliding 54% from 52-week high of RM3.08, Sarawak Consolidated Industries Bhd (not rated: RM1.40) looks attractive as technical indicators are on the mend after closing above 200D SMA (now at RM1.37) strongly in high volume (5.87 million shares vs 20-day average of 5.47 million shares).
The construction outfit (sitting with RM1.5 bil order book) is eyeing to bid for bigger infrastructure projects by (i) diversifying its geographical presence; (ii) strengthening in-house construction capabilities; and (iii) exploring supply chain partnerships or technology enabler like 3D printing that can improve efficiency and productivity.
A confirmed breakout above RM1.48 may spur prices higher towards RM1.58-RM1.66 zones while key supports are pegged at RM1.23-1.30. Meanwhile, the company announced on May 3 that it plans to raise up to RM227.8 mil in private placement based on an indicative issue price of RM1.548/share.
Malacca Securities Research
The FBM KLCI snapped a three-session losing streak as investors cheered the Government’s decision to mandate a tighter MCO 3.0 instead of a full lockdown in the country.
Although investors started to accumulate oversold stocks yesterday, we expect profit taking activities to emerge ahead of the Wesak holiday tomorrow.
Commodities-wise, crude palm oil (CPO) price continued in the pullback formation, while Brent oil price marched higher above US$68.
The FBM KLCI finished in the positive territory, crossing back above the 1,565 resistance level after three continuous sessions of sell-down.
Technical indicators turned mixed as the MACD Histogram has turned into a green bar, while the RSI was hovering below the 30 level.
We expect milder trading volume today, with support level located at 1,555-1,565, while the resistance is pegged at 1,600, followed by 1,620. – May 25, 2021
