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

17 August 2010
MARKET DATELINE

Market Technical Reading

Outlook Turns Bullish And The Index Will Likely Hit 1,390 Soon…

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

Local Market Leads:

♦ Powered by a further rally in the core heavyweights and a sharp rebound in China’s markets, the local bourse
extended its solid recovery leg for a second day to end at a 2-1/2 year high on Monday.

♦ Apart from another strong showing in Genting (+54sen), other index-linked stocks like Maybank (+22sen) and
MAS (+14sen) also attracted strong buying support ahead of their quarterly earnings announcement this week.

♦ In fact, market sentiment was buoyed by another rally in the Chinese markets (by more than 2%), after most
Asian markets took an early beating on the weaker-than-expected Japan’s GDP number. Japan’s ecocomy
expanded at an annualised growth of 0.4% in the second quarter, far worse than the expected 2.3% growth.

♦ Back home, the FBM KLCI charged forward by soaring another 10.43 pts or 0.77% to 1,370.58, as institutional
investors snapped up selective heavyweight blue chips.

♦ Trading activities remained buoyant with 974m shares, versus last Friday’s 996m shares traded. Market breadth
stayed positive with 405 gainers leading 320 losers.

Technical Interpretations:

♦ As buying momentum accelerated, the FBM KLCI expanded its bullish performance to above the 10-day SMA of
1,360 and took out its recent high of 1,370.52 with a second huge bullish candle on the chart.

♦ Technically, the decisive clearance of the 10-day SMA and the recent high imply a continuous bullish technical
outlook going forward.

♦ This in fact, was further confirmed by the upbeat readings on the short-term momentum indicators which was
reinforced by the robust daily turnover.

♦ With the fresh two-and-half year high on the chart, the index has fully restored its bullish scenario and is poised to
head towards 1,390 in the near term, in our view.

♦ On the downside, the 10-day SMA and the resistance-turn-support level of 1,350 will aid the current uptrend.
Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Clearly, the FBM KLCI’s chart outlook has once again turned bullish after enjoying another day of stunning rally, to
above the 10-day SMA of 1,360 and chalked up a fresh year high of 1,370.58 yesterday.

♦ In fact, with the help of the rallies on selective bluechips, the market sentiment has turned even more upbeat now,
as investors’ buying appetite has improved dramatically due to yesterday’s broad based buying.

♦ And as long as the average daily turnover can sustain at within 800m – 1.0bn shares, the current sentiment
appears sustainable, with the absence of strong negative leads from the external markets.

♦ As a result, we expect the FBM KLCI to rally towards the immediate upside target of 1,390, nearer to the
psychological level at 1,400 soon.

♦ Events to capture investors’ attention will be the upcoming local earnings results and the 2Q GDP number due this
week, and a series of economic data in the US markets.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 10 Aug 11 Aug 12 Aug 13 Aug 16 Aug Local Key Indices Closing
(Pts) (%)
Gainers 255 207 298 502 405 FBM KLCI 1,370.58 10.43 0.8
Losers 409 464 383 228 320 FBM 100 9,015.74 63.89 0.7
Unchanged 281 279 261 269 261 FBM ACE 3,860.10 46.84 1.2
Untraded 421 424 431 374 389 Major Overseas
Indices
Market Cap Dow Jones 10,302.01 -1.14 0.0
Turnover Nasdaq 2,181.87 8.39 0.4
(mln shares) 676 770 798 996 974 S&P 500 1,079.38 0.13 0.0
Value (RM FTSE 5,276.10 0.66 0.0
mln) 1,133 1,170 1,088 1,361 1,363 Hang Seng 21,112.12 40.55 0.2
Jakarta Composite 3,052.60 -0.41 0.0
Currency Nikkei 225 9,196.67 -56.79 -0.6
MYR vs US Seoul Composite 1,743.31 -2.93 -0.2
Dollar 3.1495 3.1710 3.1830 3.1660 3.1790 Shanghai Composite 2,661.71 55.01 2.1
SET 860.55 -1.61 -0.2
Source: RHBInvest & Bloomberg Straits Times 2,933.51 -6.46 -0.2
Taiwan Weighted 7,941.22 49.64 0.6
India Sensex 18,050.78 -116.25 -0.6
Major Commodities
NYMEX Crude Oil
(US$/barrel) 75.24 -0.15 -0.2
MDEX CPO – Third
Month (RM/metric ton) 2,708.00 -10.00 -0.4
US Interest Rate Current Last Updated
10 Aug
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 21 Sep 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ As the bulls charged forward, the KL futures market ended at its year closing high on Monday.

♦ However, the FKLI closed slightly off its day high of 1,370.50, as investors turned to lock-in some profit, after the
major European markets gave up their early gains on concerns over the poorer economic growth in Japan.

♦ Still, the FKLI for Aug contract advanced 8.00 pts or 0.59% to end the day at 1,369.50.

♦ On the chart, the closing with another bullish candle at above the 10-day SMA of 1,360 has confirmed the
resumption of its recent bullish momentum.

♦ Technically, like the cash market, the bullish sentiment was further buoyed by the upticks on both the momentum
indicators.

♦ This should pave ways for another rally today to remove the recent high of 1,374.50.

♦ Upon reaching a fresh year high, the FKLI should extend its bullish upswing towards 1,390, followed by 1,450 on
follow-through buying momentum in the near term.

♦ For the supports, the 10-day SMA and the resistance-turn-support level of 1,350 will limit the downside on the
FKLI.

Daily Trading Strategy:

♦ As the FKLI has secured a positive confirmation candle at above the 10-day SMA of 1,360 yesterday, its outlook
will turn even more bullish in the near term.

♦ A penetration to above the recent high of 1,374.50 will mean a further extension of the current upswing.

♦ The risk to this view is an unexpected fall to below the 10-day SMA and 1,350.

♦ Therefore, the FKLI is expected to swing from 1,365 to 1,383 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Aug 10 1359.00 1370.50 1355.00 1369.50 8.00 1369.50 5028 17092
Sep 10 1357.50 1370.50 1355.00 1368.00 7.00 1368.50 372 942
Dec 10 1355.50 1369.00 1355.00 1369.00 8.50 1368.50 157 314
Mar 11 1365.00 1370.50 1365.00 1368.50 6.50 1369.50 75 155

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:

♦ Most US major gauges finished flat to slightly higher on quiet trading on Monday, after encountering sharp
decline in the early session amid more negative news in the economic front.

♦ Earlier, investors continued their selling activities after a set of weak economic data. The New York Federal
Reserve reported a weaker-than-expected rebound in regional manufacturing, while the National Association of
Home Builders said the Aug’s confidence index fell to its lowest level since Mar 2009.

♦ Also, investors reacted negatively to the news that Japan’s GDP only grew 0.4% in the second quarter.

♦ Nevertheless, the markets saw a revival of fresh bargain-hunting support after the tech stocks led the rebound on
news that Dell has acquired a storage technology firm 3Par and speculation that EBay’s Paypal service will be
used by Google’s smartphone.

♦ Meanwhile, the US light sweet crude oil futures for Sep delivery eased 15cents or 0.2% to US$75.24/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ The US DJIA extended its losing streak for a fifth day, easing 1.14 pts or 0.01% to end at 10,302.01 yesterday,
but well off its day’s low of 10,209.53 on fresh bargain-hunting support.

♦ On the chart, it recorded a potential “dragonfly doji” candle, added by an uptick in the stochastic oscillators, there
are equal chance for the index to kick off a technical rebound today.

♦ On any rebound, the index could rechallenge the 21-day SMA of 10,463.

♦ But it must first remove this immediate hurdle to return to the previous positive sentiment. Otherwise, the
current correction mode will continue with the downside targets at 10,150 and the 10,000 psychological level.

Nasdaq Composite (Nasdaq)

♦ Instead of heading lower, the Nasdaq Composite index bounced up by 8.39 pts or 0.39% to 2,181.87 on Monday
with a positive candle to suggest a technical rebound ahead.

♦ Technically, a retest of 2,190 is possible today, should the buying momentum continue.

♦ But, until it can fully recapture the 21-day SMA of 2,251, it is still vulnerable to a possible resumption of selling
pressure towards 2,100 and the Jul’s low of 2,061.14 in the near term, in our view.

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Daily Technical Watch:

Chart 7: MAS Daily Chart 8: MAS Intraday

Malaysian Airline System (3786)

A retest of RM2.38 soon if it sustains at above RM2.20…

♦ The share price of Mas experienced a sharp correction in late Dec 2009, breaching the key support level of
RM2.38, before plunging to below the RM2.03 support level by Feb 2010.

♦ The stock hit a multi-year low of RM1.80 prior to a technical rebound to retest the RM2.03 important level.

♦ It struggled for weeks, before gaining an upper hand on the trading sentiment and launched a meaningful
recovery in Mar.

♦ However, after hitting the resistance at RM2.38, the stock succumbed to profit-taking pressure and fell back to
below the RM2.03 key support level.

♦ But, since Jun 2010, the stock has regained its upward momentum and moved up steadily to above the RM2.03
level. It marched higher and as the momentum accelerated of late, it pierced through the key RM2.20 level
yesterday and closed the day at RM2.28 with a huge bullish candle on the chart.

♦ Technically, the bullish candle suggests follow-through buying momentum likely for today.

♦ Coupled with the upbeat momentum readings and the successful breakout of RM2.20 with strong turnover, it is
poised to retest the RM2.38 significant hurdle soon.

♦ In our view, if it can sustain at above RM2.20 on any profit-taking pressure, it will generate enough momentum
to push across RM2.38 and even to challenge a stronger resistance at RM2.50 in the near term.

♦ Losing RM2.20 will see a further retreat to the supportive 10-day and 40-day SMAs near RM2.14 and RM2.10.

Technical Readings:

♦ 10-day SMA: RM2.14

♦ 40-day SMA: RM2.098

♦ Support: IS = RM2.20 S1 = RM2.03

♦ Resistance: IR = RM2.38 R1 = RM2.50 R2 = RM2.69

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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
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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
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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
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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.

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actions of third parties in this respect.

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