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

26 March 2010
MARKET DATELINE

Market Technical Reading

The 10-day SMA And 1,300 Supports Remains Strong...

Chart 1: KLCI Daily Chart 2: KLCI Intraday

Local Market Leads:

♦ The FBM KLCI extended its recovery leg for a third day on Thursday, as hopes for a Selangor water industry
consolidation and Bank Negara’s GDP growth forecast increase outweighed the weakness in the overnight US
markets.

♦ Water-related stocks, led by Puncak (+26sen) and KPS (+12sen) rallied after Gamuda’s 40% unit, SPLASH
offered RM10.75 bn to the federal and Selangor state governments to buy the state's water concessions.

♦ Meanwhile, investors welcomed the Central Bank’s upgrade on the 2010 GDP growth forecast. Bank Negara in its
BNM Annual Report said the country’s economy is expected to expand 4.5% to 5.5% this year.

♦ As a result, the FBM KLCI went up by 3.03 pts or 0.23% to 1,312.48, even though most regional markets finished
lower amid a downgrade on Portugal’s credit rating by Fitch Ratings.

♦ Daily turnover increased from 1.14bn shares to 1.24bn shares yesterday. Market breadth stayed positive, as 461
counters up outpacing 303 counters down.

Technical Interpretations:

♦ Led by steady rotational plays, the FBM KLCI enjoyed another day of mild rebound yesterday.

♦ The index chalked up a small positive candle after Wednesday’s “doji” candle, indicating a potential resumption of
buying momentum today.

♦ Not only that, both the stochastic oscillators and 14-day RSI ticked up further to suggest strengthening
momentum in the near term.

♦ These positive technical developments will pave the way for a further run-up towards the recent high of 1,334.34
in the near term, in our view.

♦ On the support, we see solid backing near the 10-day SMA of 1,303 and the 1,300 level.

Please read important disclosures at the end of this report.

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

Daily Trading Strategy:

♦ Instead of taking a breather, the FBM KLCI extended its recovery leg yesterday amid strong rotational buying
momentum.

♦ The ability of the market to absorb the constant profit-taking pressure and the close at above the 10-day SMA of
1,303 and the psychological support level of 1,300, suggest the recent technical breakout signal remains valid.

♦ More importantly, the improved trading sentiment and the stronger volume participation of late have implicated
continuous recovery momentum likely ahead.

♦ Therefore, the FBM KLCI could see further upside towards the recent high of 1,334.34 in the near term.

♦ Any profit-taking dip, if it occurs, will likely to be temporary, with solid supports near the 10-day SMA and 1,300.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 19 Mar 22 Mar 23 Mar 24 Mar 25 Mar Local Key Indices Closing
(Pts) (%)
Gainers 278 301 447 453 461 FBM KLCI 1,312.48 3.03 0.2
Losers 357 364 253 255 303 FBM 100 8,615.29 36.84 0.4
Unchanged 286 280 278 295 247 FBM ACE 4,211.69 3.30 0.1
Untraded 427 403 371 346 336
Major Overseas
Market Cap Indices
Turnover Dow Jones 10,841.21 5.06 0.0
(mln shares) 575 675 908 1,136 1,244 Nasdaq 2,397.41 -1.35 -0.1
Value (RM S&P 500 1,165.73 -1.99 -0.2
mln) 1,123 1,254 1,488 1,689 1,846 FTSE 5,727.65 49.77 0.9
Hang Seng 20,778.55 -230.07 -1.1
Currency Jakarta Composite 2,799.15 24.30 0.9
MYR vs US Nikkei 225 10,828.85 13.82 0.1
Dollar 3.3020 3.3170 3.3170 3.3155 3.3180 Seoul Composite 1,688.39 7.38 0.4
Shanghai Composite 3,019.18 -37.63 -1.2
Source: RHBInvest & Bloomberg SET 784.38 -2.16 -0.3
FT Straits Times 2,888.37 2.01 0.1
Taiwan Weighted 7,838.10 15.39 0.2
India Sensex 17,558.85 107.83 0.6
Major Commodities
NYMEX Crude Oil
(US$/barrel) 80.53 -0.08 -0.1
MDEX CPO – Third
Month (RM/metric ton) 2,575.00 15.00 0.6
US Interest Rate Current Last Updated
Overnight Fed Fund 16 Mar
0-0.25% Unch
Rate 2010
Next FOMC meeting 27-28 Apr 2010

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

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ The local futures index shrugged off the weaker overseas performance by climbing higher yesterday amid steady
follow-through buying supports.

♦ After a brief pullback to 1,311.50 low in the morning session, along with the declines in the regional markets, the
FKLI kicked off a recovery leg on fresh buying supports in the afternoon session.

♦ In the late session, the recovery momentum intensified further with the FKLI for Mar contract rising 4.50 pts or
0.34% to end the day higher at 1,317.50.

♦ In the meantime, the Apr contract also climbed up 4.50 pts or 0.34% to 1,318.00.

♦ Chart wise, the FKLI has formed a positive candle, erasing the negative candle registered earlier.

♦ Aided by the continuous improvement on the short-term momentum indicators, and a successful close at above
the 10-day SMA, the FKLI may continue to recover today on follow-through buying momentum.

♦ But first, a quick removal of Wednesday’s high of 1,318.00 is required to attract further buying towards the Mar
high of 1,337.

♦ On the downside, the 10-day SMA of 1,306 and the 1,300 psychological level will continue to support the current
recovery leg, in our view.

Daily Trading Strategy:

♦ As the FKLI continued to hold at above the 10-day SMA of 1,306 and the 1,300 level, it is likely to see more
buying momentum today.

♦ Traders can prepare to re-establish “long” position with a target of 1,337, but they must quickly cut loss if the
futures index unexpectedly falls to below 1,300.

♦ Today’s trading range for the FKLI should be around 1,310 to 1,320.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Mar 10 1314.00 1317.50 1311.50 1317.50 4.50 1317.50 4465 19577
Apr 10 1316.00 1318.00 1312.00 1318.00 4.50 1318.00 1543 2902
Jun 10 1316.50 1316.50 1312.00 1316.00 4.00 1317.00 87 516
Sep 10 1317.00 1317.00 1313.00 1314.50 2.50 1317.00 36 209

Source: Bursa Malaysia

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

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

US Market Leads:

♦ Overnight US stocks gave up most of their early gains on global debt concerns after a comment by European
Central Bank’s president.

♦ The European Central Bank President Jean-Claude Trichet said that if the IMF or some other body exercises the
responsibility in lieu of the Eurogroup or instead of governments, it signals a bad sign.

♦ Meanwhile, the number of workers filing for jobless aid fell sharply last week and a gauge of underlying labour
market trends hit a one-and-a-half year low, boosting hopes the economy is on the verge of creating jobs.

♦ Initial claims for state unemployment benefits fell 14,000 to a seasonally adjusted 442,000, the US Labour
Department said yesterday.

♦ The US light sweet crude oil futures for May delivery fell US$0.08 or 0.1% to US$80.53/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Despite an early push-up to a fresh high of 10,955.48, the US DJIA failed to maintain its momentum, giving up
most of its gains yesterday to end marginally positive at 10,841.21.

♦ For the day, it has only gained 5.06 pts or 0.05%. It registered a “shooting star” candle, following a “negative
harami” candle a day ago.

♦ Disappointingly, as it has fallen back to below 10,850, chances are that it may struggle to rechallenge this tough
technical hurdle in the next sessions.

♦ But, if the momentum continues to deteriorate, as shown on the stochastic oscillators’ fresh “sell” signal, it may
head for a retracement in the near term.

Nasdaq Composite (Nasdaq)

♦ Although the early trading saw some strength on the Nasdaq Composite Index, touching a fresh year high of
2,432.25, afternoon weakness forced the index fell 1.35 pts or 0.06% to 2,397.41, with a negative candle.

♦ This, plus a fresh “sell” signal on the stochastic oscillators, indicates continuous weakness going forward.

♦ The index may revisit the solid supports near the resistance-turn-support level of 2,330 and the 21-day SMA of
2,335, if selling continues.

Page 4 of 6
A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com
Daily Technical Watch:
Chart 7: Kencana Daily Chart 8: Kencana Intraday

Kencana Petroleum (5122)

The stock may retest RM1.72 and RM1.81 in the near term…

♦ Kencana kicked off a long and steady recovery in Apr 2009, when its 10-day SMA cut above the 40-day SMA near
a lower support level of RM0.76.

♦ The stock faced a tough resistance near RM1.25 from Jun to Sep 2009, but when it managed to remove the
hurdle in mid-Sep, the uptrend resumed and the stock rose further.

♦ Upon a successful breakout of the RM1.50 hurdle in early Jan 2010, the share price pushed further to a high of
RM1.81, but it instantly triggered a sharp correction move.

♦ It plunged to below the RM1.72 and RM1.50 support levels, before hitting the brakes at RM1.35.

♦ Thereafter, the stock recuperated its buying support and slowly recovered to above the RM1.50 level in early Mar
2010.

♦ Following a mild consolidation near RM1.50, the stock registered its third positive candle in a row yesterday,
ending up 7sen or 4.6% to RM1.59 on the day.

♦ As it reclaimed the level at above RM1.50, the 10-day SMA has recrossed above the 40-day SMA, this refreshed
the upside potential and repointing the stock to the immediate target near a 2sen technical gap at RM1.67.

♦ If the upbeat momentum and trading volume continue to improve, the stock will retest the RM1.72 tough
resistance level, before rechallenging the multi-year high of RM1.81 in the near term.

♦ On the downside, key support is only seen near RM1.50, enar the 10-day and 40-day SMAs.

Technical Readings:

♦ 10-day SMA: RM1.509

♦ 40-day SMA: RM1.494

♦ Support: IS = RM1.50 S1 = RM1.25 S2 = RM1.05

♦ Resistance: IR = RM1.72 R1 = RM1.93

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

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