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 18 October 2010
Market Technical Reading
Key Supportive Level Is Near The 10-day SMA...

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

Local Market Leads:

♦ Bursa Malaysia continued its profit-taking leg and turned lower on Friday, as investors continued to unload their
positions during the announcement of the 2011 Budget in late session.

♦ Also, sentiment was further undermined by the fresh selling pressure across regional markets, despite a more than
3% rally in Shanghai Composite Index.

♦ The regional investors turned cautious ahead of a speech by the US Federal Reserve chairman Ben Bernanke
scheduled later on Friday night.

♦ Locally, the FBM KLCI dropped 6.52 pts or 0.44% to 1,489.86, mainly hit by the strong selldown in banking
heavyweights Maybank (-14sen) and CIMB (-6sen). Turnover declined for the first time in six trading days to
1.02bn shares versus Thursday’s 1.27bn shares. Market breadth stayed negative with 405 losers outpacing 324
gainers.

♦ Prime Minister Najib Razak in his speech on the 2011 Budget revised the 2010 GDP growth higher to 7%, while
forecasting a 5 - 6% economic growth in 2011. Among the announcements in the Budget included the MRT project
worth RM40bn, 100-story tower in KL, and a 5-year freeze in toll hike on PLUS expressways.

Technical Interpretations:

♦ The FBM KLCI accumulated another negative candle, as profit-taking activities intensified on Friday.

♦ Coupled with a further downtick on the short-term momentum indicators, the index is likely to undergo follow-
through profit-taking leg today, in our view.

♦ This means the benchmark could ease further towards the 10-day SMA of 1,483 in the early part of this week.

♦ But as we reiterated earlier, as long as the index can sustain at above the medium-term support level of 1,450
and the 10-day SMA, our outlook on the current uptrend will remain firmly positive.

♦ On the upside, it needs to retake the 1,500 psychological level to restore its bullish momentum.

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Daily Trading Strategy:

♦ As expected, the FBM KLCI continued to retreat on intensifying profit-taking activities upon the announcement of
the 2011 Budget by PM Najib Razak.

♦ Given the second negative candle and the weaker technical readings on the chart, the index could continue to ease
in the early part of this week.

♦ In other words, the benchmark could revisit the key supportive level near the 10-day SMA of 1,483 soon.

♦ However, we remain optimistic and expect the bargain-buying support to return near the 10-day SMA.

♦ For the medium-term outlook, the bullish view remains as long as it sustains at above the 40-day SMA and the
solid level of 1,450.

♦ In fact, we foresee buyers to return by mid of this week to push it over 1,500 and to expand its uptrend to the all-
time high level of 1,524.69 soon.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 11 Oct 12 Oct 13 Oct 14 Oct 15 Oct Local Key Indices Closing
(Pts) (%)
Gainers 479 327 576 348 324 FBM KLCI 1,489.86 -6.52 -0.4
Losers 287 420 236 455 405 FBM 100 9,815.67 -31.06 -0.3
Unchanged 293 306 356 302 341 FBM ACE 4,322.77 142.00 3.4
Untraded 296 308 296 260 296 Major Overseas
Indices
Market Cap Dow Jones 11,062.78 -31.79 -0.3
Turnover Nasdaq 2,468.77 33.39 1.4
(mln shares) 1,094 1,169 1,200 1,274 1,021 S&P 500 1,176.19 2.38 0.2
Value FTSE 5,703.37 -23.84 -0.4
(RM mln) 1,715 1,901 2,027 2,042 1,647 Hang Seng 23,757.63 -94.54 -0.4
Jakarta Composite 3,597.03 -21.45 -0.6
Currency Nikkei 225 9,500.25 -83.26 -0.9
MYR vs US Seoul Composite 1,902.29 2.53 0.1
Dollar 3.0995 3.1080 3.0925 3.0820 3.0800 Shanghai Composite 2,971.16 91.52 3.2
SET 997.15 3.43 0.3
Source: RHBInvest & Bloomberg Straits Times 3,204.27 9.25 0.3
Taiwan Weighted 8,205.30 -10.15 -0.1
India Sensex 20,125.05 -372.59 -1.8
Major Commodities
NYMEX Crude Oil
(US$/barrel) 81.25 -1.44 -1.7
FCPO – Third Month
(RM/metric ton) 2,930.00 14.00 0.5
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:

♦ The FKLI ended lower on continuous profit-taking pressure on Friday, as traders turned cautious after the 2011
Budget announcement and as the regional front encountered further selling pressure.

♦ The FKLI for Oct contract fell 7.00 pts or 0.47% to 1,485.00, after fluctuating at between the 1,481.50 low and the
1,492.00 high level during the day.

♦ Though it managed to defend above the 10-day SMA of 1,482, the formation of the second negative candle
suggests the current selling leg is likely to persist today.

♦ This means the FKLI may even dip to below the 10-day SMA soon.

♦ Nevertheless, we stick to our positive outlook on the futures index’s near-term trend, as we expect it to sustain at
above the 1,450 breakout point support, near the 40-day SMA.

♦ As such, we foresee the momentum indicators to weaken in the near term, before showing any signs of a potential
technical rebound.

♦ Positively, once the bargain-hunting activities increase to near the 40-day SMA, we predict a sharp recovery for it
to retest the recent high of 1,501, before gearing up for the all-time high level of 1,536.

Daily Trading Strategy:

♦ Traders should expect the FKLI to miss the 10-day SMA today, and brace for more downside in the early part of
this week.

♦ But traders should remain optimistic and be ready to reverse position when the future index shows sign of a
recovery.

♦ Meanwhile, we expect the FKLI to fluctuate from 1,475 to 1,487 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Oct 10 1491.00 1492.00 1481.50 1485.00 -7.00 1485.00 4696 22619
Nov 10 1491.50 1491.50 1482.00 1488.00 -4.50 1488.00 393 245
Dec 10 1486.50 1491.00 1483.00 1485.50 -6.50 1485.50 72 377
Mar 11 1485.00 1485.00 1485.00 1485.00 -7.00 1486.00 1 128

Source: Bursa Malaysia

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 18 October 2010

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

US Market Leads:

♦ Most US stocks closed higher on Friday, as the rally on tech stocks and hopes for further quantitative easing
measures outweighed ongoing concerns over banks’ foreclosure practice and a drop in consumer confidence.

♦ The markets started the day on a strong note after the Federal Reserve chairman Ben Bernanke said the Fed has
"a case for further action" to boost the economy, due to high unemployment and low inflation. Also, sentiment
was boosted by a tech rally, after Google soared 11% on its upbeat earnings.

♦ However, the benchmark Dow, was dragged lower due to continuous selloff in financial stocks, like Bank of
America and JPMorgan & Chase, and news that the University of Michigan’s preliminary index of consumer
sentiment unexpectedly fell to 67.9 in Oct from 68.2 in end-Sep.

♦ As the greenback bounced slightly, the US light sweet crude oil futures for Nov delivery took another beating by
losing US$1.44 or 1.7% to US$81.25/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ The DJIA dropped another 31.79 pts or 0.29% to 11,062.78 on Friday and closed with a negative candle.

♦ Not helping either, the short-term momentum readings continued to display chart weakness, hence raising its risk
of a further pullback today.

♦ Therefore, it could retreat to the 11,000 level soon, unless it can quickly take out the recent high of 11,155.23 to
restore its upward momentum towards the resistance target at 11,250.

♦ But even if 11,000 fails to hold, the current uptrend will continue to be underpinned by the solid 21-day SMA of
10,874 and the key breakout point at 10,850, in our view.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index successfully staged a strong comeback by surging 33.39 pts or 1.37% to end at its
day high of 2,468.77, almost on the dot of the 2,470 chart resistance barrier.

♦ But, with a record of a potential “hangman” candle, it risks a possible retreat today.

♦ It must penetrate above 2,470 to push for more upside towards the Apr’s high of 2,535.28. Otherwise, more
pullbacks can be expected to a technical gap at 2,421.79 and the 21-day SMA of 2,379 in the near term.

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Daily Technical Watch:

Chart 7: Axiata Daily Chart 8: Axiata Intraday

Axiata Group (6888)

Forming a support near the SMAs prior to any technical recovery…

♦ After a successful penetration of a heavy resistance level of RM3.70 in Feb 2010, the share price of Axiata was
trapped within a trading range of RM3.70 – RM4.00 from Mar to Jul 2010.

♦ But, the Jul rally that brought the stock across the RM4.00 resistance level has managed to trigger a sustainable
rally on the stock.

♦ As a result, it trended smoothly to above RM4.40 and touched its highest level since Jun 2008 at RM4.66 in Sep
2010.

♦ Although it had encountered a sizeable retracement to the RM4.40 support region in late Sep, its share price
performance in the recent weeks has been encouraging. It retested the high of RM4.66 recently before easing
slightly to RM4.53 on last Friday.

♦ Closed the day with a negative candle and the downtick readings on the momentum indicators, the stock is
poised to see further downside in early this week.

♦ However, given the recent recovery on the 10-day SMA from the medium-term support of the 40-day SMA, its
uptrend remains firmly intact, in our view.

♦ We expect the stock to form a firm support near the 10-day and 40-day SMAs, and above the RM4.40 key
support level, prior to any technical recovery leg.

♦ Upon successful recovery, it will recross RM4.66, and head towards the RM4.80 resistance level soon.

Technical Readings:

♦ 10-day SMA: RM4.517

♦ 40-day SMA: RM4.476

♦ Support: IS = RM4.40 S1 = RM4.00 S2 = RM3.70

♦ Resistance: IR = RM4.66 R1 = RM4.80 R2 = RM5.24

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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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