PP 7767/09/2010(025354)

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

Da ily T rad ing S trat egy

3 August 2010
MARKET DATELINE

Market Technical Reading

Remain Bullish On The FBM KLCI…

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

Local Market Leads:

♦ Buoyed by rallies in the regional markets as well as the recent announced merger & acquisition (M&A) news, the
local market extended its winning streak for a seventh day on Monday.

♦ But gains were tepid, given the mild profit-taking pressure on the blue chips. Upon closing, the FBM KLCI settled
at its highest closing for the year at 1,363.60 with another gain of 2.68 pts or 0.20%.

♦ Overall market tone remained bullish amid strong rotational interests on the lower liners, such as KNM (+3sen),
Jadi (+2sen) and Equine (+6.5sen). Backed by growing risk appetite of investors, turnover stayed active at 964m
shares, up from last Friday’s 918m shares. There were 494 advancers versus 280 decliners.

♦ Regionally, investors overlooked the weak US 2Q GDP numbers. In fact, the slowest growth in China’s Purchasing
Managers’ Index in 17 months has raised hopes that the China government might ease its tightening policy soon.

♦ This paved the way for a rally across Asian and European markets. Taiwan Weighted index rallied 1.95%, while
Hang Seng soared 1.82%.

Technical Interpretations:

♦ After scaling to a fresh 29-month high of 1,368.43, the FBM KLCI eased from the day high and ended the day with
a potential “star-like” candle, indicating a possible profit-taking dip today.

♦ Besides, the marginal “sell” signal on the stochastic oscillators in the “overbought” region may foretell a potential
retreat soon, although the overall momentum readings are mixed.

♦ All in, if the index fails to chalk up a fresh year high today, it will ease towards the 1,350 and the 10-day SMA
soon.

♦ But if it still sustains at above these levels, the short- to medium-term outlook of the FBM KLCI remains bullish,
and the near-term upside target of 1,390 stays intact.

Please read important disclosures at the end of this report.

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 1 of 6
available for download from www.rhbinvest.com
 3 August 2010

Daily Trading Strategy:

♦ Based on the increased short-term participation amongst institutions and retailers, as well as the FBM KLCI’s
ability to scale to a fresh year high yesterday, we remain bullish, though the chart shows a “star-like” candle on
Monday. Technically, the candle suggests a possible pause or a retreat today.

♦ In our view, as long as the index sustains at above the recent bullish breakout point of 1,350 and the supportive
10-day SMA, any pullback will be viewed as a temporary setback.

♦ In other words, any short-term weakness will offer a chance for bargain hunters to reopen their positions for a
further rally ahead.

♦ In short, the FBM KLCI’s current bullish uptrend should persist towards the 1,390 important upside target in the
near term.

♦ And the upswing will resume, if it ekes out beyond yesterday’s high of 1,368.43.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 27 Jul 28 Jul 29 Jul 30 Jul 2 Aug Local Key Indices Closing
(Pts) (%)
Gainers 308 445 386 348 494 FBM KLCI 1,363.60 2.68 0.2
Losers 381 264 345 378 280 FBM 100 8,975.58 21.94 0.2
Unchanged 285 278 279 274 243 FBM ACE 3,821.93 27.16 0.7
Untraded 391 378 355 365 348 Major Overseas
Indices
Market Cap Dow Jones 10,674.38 208.44 2.0
Turnover Nasdaq 2,295.36 40.66 1.8
(mln shares) 732 847 1,000 918 964 S&P 500 1,125.86 24.26 2.2
Value (RM FTSE 5,397.11 139.09 2.6
mln) 1,335 1,251 1,481 1,422 1,284 Hang Seng 21,412.79 382.98 1.8
Jakarta Composite 3,058.98 -10.30 -0.3
Currency Nikkei 225 9,570.31 33.01 0.3
MYR vs US Seoul Composite 1,782.27 22.94 1.3
Dollar 3.1815 3.1870 3.1820 3.1790 3.1580 Shanghai Composite 2,672.52 35.02 1.3
SET 863.18 7.35 0.9
Source: RHBInvest & Bloomberg Straits Times 3,025.04 37.34 1.2
Taiwan Weighted 7,911.68 151.05 1.9
India Sensex 18,081.21 212.92 1.2
Major Commodities
NYMEX Crude Oil
(US$/barrel) 81.34 2.39 3.0
MDEX CPO – Third
Month (RM/metric ton) 2,570.00 53.00 2.1
US Interest Rate Current Last Updated
22-23 Jun
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 10 Aug 2010

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 2 of 6
available for download from www.rhbinvest.com
 3 August 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Following last Friday’s selloff, the local futures market kicked off a powerful rebound on Monday, settling the first
day of trading in Aug 2010 at a fresh closing high for the year.

♦ Yesterday’s renewed rally was driven by external forces, as overseas markets surged more than 1% on the back of
a possible relaxation in China’s tightening policy as well as earnings optimism in global markets.

♦ For the day, the FKLI for Aug contract jumped 13.0 pts or 0.96% to end at 1,367.00.

♦ With a positive candle sealed on the chart, this has effectively overthrown the previous bearish candle which had
painted for a possible technical pullback towards the 10-day SMA.

♦ Given yesterday’s gain, plus the fresh upticks on the momentum indicators, the FKLI is poised to extend its rally
towards the 1,390 key resistance level in the near term, in our opinion.

♦ For now, its immediate downside support is seen at a tiny 1.5 pts technical gap at 1,361 - 1362.5, followed by the
10-day SMA of 1,353 and the resistance-turn-support level of 1,350.

♦ Without crossing below these supports, the short- to medium-term outlook of the futures index will likely stay
upbeat.

Daily Trading Strategy:

♦ Yesterday’s sharp rebound to another fresh year high offers reinforcement to our bullish view on the local futures
market.

♦ Traders should, therefore, stay bullish in anticipation of a further rally ahead to 1,390.

♦ Meanwhile, we expect the FKLI to move from 1,365 and 1,380 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Aug 10 1364.00 1368.00 1362.50 1367.00 13.00 1367.00 4518 19150
Sep 10 1363.50 1368.50 1363.00 1368.00 14.50 1368.00 237 604
Dec 10 1363.50 1368.50 1362.50 1368.50 15.00 1368.50 151 270
Mar 11 1363.00 1369.00 1363.00 1369.00 - 1369.00 67 0

Source: Bursa Malaysia

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 3 of 6
available for download from www.rhbinvest.com
 3 August 2010

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

US Market Leads:

♦ Lifted by solid earnings from European banks, coupled with a rally in commodity prices, overnight US stocks
reversed the recent retreat and staged a powerful rally on Monday.

♦ UK’s HSBC’s profit for the first half doubled, while France’s BNP Paribas reported a 31% jump in net profit in the
2Q. Both earnings exceeded market expectations. This set a bullish rally in European markets.

♦ Commodity-related stocks, Exxon Mobil and Alcoa rose 3.8% and 4.8% respectively, after commodity prices
advanced on a weaker greenback as well as some better-than-expected US economic data.

♦ US light sweet crude oil futures for Sep delivery surpassed the US$81 mark for the first time since May, soaring
US$2.39 or 3.0% to US$81.34/barrel.

♦ Meanwhile, the Institute for Supply Management’s manufacturing index fell to 55.5 in Jul from Jun’s 56.2, but
better than expectation of a dip to 54.5. Separately, construction spending unexpectedly rose 0.1% in Jun.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ As expected, the US DJIA launched a strong rebound last night following the recent pullbacks. For the day, the
index rallied 208.44 pts or 1.99% to 10,674.38.

♦ The closing with a bullish candle confirmed the previous “dragonfly doji” candle, suggesting a further rally ahead.

♦ Not only that, the penetration to above the recent high of 10,584.99 as well as the Jun high of 10,594.16 also
mark a bullish technical breakout on the DJIA.

♦ All said, we expect the resumption of a new uptrend will lead it to the next upside target at 10,850 soon, before
paving way for an extended rally towards 11,250. Its immediate support is around the 21-day SMA of 10,267.

Nasdaq Composite (Nasdaq)

♦ As buying momentum accelerated, the Nasdaq Composite index shot up by 40.66 pts or 1.80% to 2,295.36.

♦ As it acquired a second positive candle, plus an “uptick” in both momentum indicators, the Nasdaq is poised to
retake the recent high of 2,307.60 in order to challenge the immediate resistance level at 2,330 soon.

♦ Upon a convincing removal of 2,330, the index will be open to more upside towards 2,470.

♦ Meanwhile, its uptrend will be well supported at the 21-day SMA near 2,220, followed by 2,190.

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 4 of 6
available for download from www.rhbinvest.com
 3 August 2010

Daily Technical Watch:

Chart 7: MPHB Daily Chart 8: MPHB Intraday

Multi-Purpose Holdings (3859)

Extended upside to above RM2.20 if buying support continues…

♦ The share price of MPHB was stuck within a tight trading range of RM1.80 to RM1.97 from Sep 2009 to Mar 2010,
before a powerful breakout occurred in late Mar. It soared to RM2.48 in early Apr 2010, but as the stock failed to
sustain at above the RM2.43 significant resistance level, it triggered a steep profit-taking leg in Apr and May.

♦ However, after reaching a low of RM1.90 in late May 2010, the stock issued a technical rebound to retest a
resistance near RM2.20 in Jun.

♦ But, as it failed to penetrate the hurdle, it was pressed down again to the RM1.91 level, before stabilising near
the support region of RM1.97 in the whole of Jul.

♦ Yesterday, the stock jump-started with a huge 4sen technical gap on the chart, prior to a positive closing at
RM2.13, off an intraday high of RM2.20.

♦ Technically, although it failed to pierce through the key RM2.20 level, the record of a bullish candle, strong
volume and the upbeat momentum readings suggest a likely follow-through buying momentum ahead.

♦ Given that the 10-day SMA has ticked upward, chances are it may cut across the 40-day SMA soon, if buying
persists in the near term. That will add another medium-term bullish sign on the chart.

♦ We are looking at the RM2.43 as the next key resistance level. Support is at RM1.97, at the 10-day and 40-day
SMAs near RM2.01.

Technical Readings:

♦ 10-day SMA: RM2.01

♦ 40-day SMA: RM2.014

♦ Support: IS = RM1.97 S1 = RM1.80 S2 = RM1.60

♦ Resistance: IR = RM2.20 R1 = RM2.43

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 5 of 6
available for download from www.rhbinvest.com
 3 August 2010

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.

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 6 of 6
available for download from www.rhbinvest.com