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

19 July 2010
MARKET DATELINE

Market Technical Reading

Knee-jerk Reaction Expected From The Sharp Drop In US Markets…

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

Local Market Leads:

♦ Bursa Malaysia resumed its recovery strength, as the merger & acquisition (M&A) news outweighed the sudden
price hikes of key essential items by the Government and a sluggish regional markets’ performance.

♦ South Korea's Honam Petrochemical Corp agreed to buy 72.6% stake in Titan Chemicals for RM2.35/share, paying
a hefty premium from the closing price at RM1.85. At the same time, French’s cement maker, Lafarge SA sold
11.2% stake in its unit, Lafarge Malayan Cement for RM595m.

♦ Separately, it was reported that UEM Group has intention to sell its 45.3% stake in Time Engineering soon.

♦ These news flows have renewed buying interests across the board, especially on the lower liners like Time
(+4.5sen), TimeCom (+2.5sen) and Scomi (+2.0sen), which were amongst the top active counters of the day.

♦ The FBM KLCI edged up 2.57 pts or 0.19% to 1,336.65, bouncing from an intraday low of 1,332.68.

♦ As buying interest improved, daily turnover increased to 794m shares from Thursday’s 620m shares. Clearly,
advancers beat decliners by a ratio of more than 2 to 1.

Technical Interpretations:

♦ Despite a brief setback to the 1,332.68 low (-1.40 pts) in the early session, the FBM KLCI managed to regain its
buying momentum and staged a comeback.

♦ On the chart, it formed a small positive “harami” candle, suggesting that the FBM KLCI could refresh its recent
robust upswing momentum soon.

♦ But due to the mixed momentum readings, a further penetration to above last Wednesday’s high of 1,341.96 is
needed to fuel a challenge to the solid technical obstacle of 1,350.

♦ Removing 1,350 will see an extended rally towards 1,390. But for now, the support is near the 10-day SMA of
1,323.
Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Impressively, the FBM KLCI has managed to recapture a positive candle, after a swift pullback from the recent
steep rally.

♦ The closing also suggests a potential resumption of buying momentum, if it manages to chalk-up fresh level
beyond last Wednesday’s 1,341.96 intraday high level.

♦ Given the improvement on the daily turnover, which has moved closer to the healthy 800m – 1.0bn shares mark,
and the active rotational plays across the board due to fresh M&A leads, the local market sentiment should turn
even more upbeat this week, technically.

♦ However, due to last Friday’s sharp drop in US markets, which has wiped out the entire week’s gain, Asian
markets sentiment, including those in Bursa Malaysia are expected to suffer from a negative knee-jerk reaction of
the US market sentiment today.

♦ As a result, we expect fresh profit-taking activities on stocks that have gained sharply late last week.

♦ This, in our view, will drag the FBM KLCI to the short-term support at the 10-day SMA near 1,323 soon.

♦ However, if the market can withstand the pressure and stay at above the 10-day SMA, buying activities may
slowly return if the US markets stabilise in the next few sessions.

♦ For the medium term, the index is supported by the 40-day SMA near 1,304 and the critical psychological level at
1,300.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 12 Jul 13 Jul 14 Jul 15 Jul 16 Jul Local Key Indices Closing
(Pts) (%)
Gainers 371 363 506 242 476 FBM KLCI 1,336.65 2.57 0.2
Losers 265 284 194 390 206 FBM 100 8,807.33 18.21 0.2
Unchanged 277 289 269 289 263 FBM ACE 3,764.61 -1.71 0.0
Untraded 451 428 395 443 424 Major Overseas
Indices
Market Cap Dow Jones 10,097.90 -261.41 -2.5
Turnover Nasdaq 2,179.05 -70.03 -3.1
(mln shares) 611 574 802 620 794 S&P 500 1,064.88 -31.60 -2.9
Value (RM FTSE 5,158.85 -52.44 -1.0
mln) 991 1,085 1,538 1,128 1,196 Hang Seng 20,250.16 -5.46 0.0
Jakarta Composite 2,992.45 11.85 0.4
Currency Nikkei 225 9,408.36 -277.17 -2.9
MYR vs US Seoul Composite 1,738.45 -12.84 -0.7
Dollar 3.2030 3.2055 3.1955 3.1975 3.2065 Shanghai Composite 2,424.27 -0.03 0.0
SET 827.54 6.52 0.8
Source: RHBInvest & Bloomberg FT Straits Times 2,957.72 14.17 0.5
Taiwan Weighted 7,664.57 -39.95 -0.5
India Sensex 17,955.82 46.36 0.3
Major Commodities
NYMEX Crude Oil
(US$/barrel) 76.01 -0.61 -0.8
MDEX CPO – Third
Month (RM/metric ton) 2,449.00 10.00 0.4
US Interest Rate Current Last Updated
22-23 Jun
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 10 Aug 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Thanks to the buoyant sentiment in the cash market amid the M&A speculations, the local futures market
overturned the earlier sluggish performance and turned around to end positively on Friday.

♦ From the initial selldown to 1,333.50 low on weaker regional sentiment, the FKLI engineered a mild recovery in
the afternoon session. The FKLI for Jul contract settled higher by 3.50 pts or 0.26% to 1,340.50.

♦ Chart wise, it registered a positive candle suggesting a slowdown in the recent profit-taking momentum, although
both the short-term momentum readings remained mixed.

♦ In fact, the upswing could be extended if there is enough follow-through buying support today.

♦ Having said that, the FKLI needs to penetrate above the recent high of 1,347.50 as well as May’s high of 1,352.50
to turn more bullish on its trading sentiment going forward.

♦ On the flip side, a resumption of fresh selling activities will lead to a retest of the 10-day SMA support near 1,324.

♦ But, as long as the futures index can sustain at above the 10-day SMA, the short-term outlook of the FKLI will
remain positive.

♦ For the medium-term outlook, the futures index will likely find support at the 40-day SMA of 1,305 and the 1,300
solid psychological level to buffer any additional selling pressure.

Daily Trading Strategy:

♦ The surprise recovery on Friday spells a possible resumption of upswing momentum today.

♦ But, due to the US markets’ plunge on Friday, the short-term trading sentiment on the FKLI could dive on regional
markets’ weakness. It will turn even more negative if it loses the 10-day SMA near 1,324.

♦ The FKLI’s trading band is expected to range from 1,323 to 1,335 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Jul 10 1336.50 1342.00 1333.50 1340.50 3.50 1340.50 4106 18310
Aug 10 1337.00 1341.50 1333.00 1340.00 3.00 1340.00 318 893
Sep 10 1336.00 1340.00 1332.00 1339.00 3.00 1339.00 106 501
Dec 10 1332.00 1338.00 1332.00 1338.00 2.50 1338.50 15 254

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:

♦ Wall Street was slapped by strong selling pressure on last Friday following a stream of disappointing revenues
from big corporates as well as a surprise steep fall in the US consumer confidence.

♦ While General Electric (GE) (-4.6%), Bank of America (-9.2%) and Citigroup (-6.3%) reported earnings that beat
expectations, investors were disappointed on their weaker quarterly revenues.

♦ More damaging, from a survey in the University of Michigan, US consumer sentiment dropped far more than
expected to 66.5 in a preliminary July reading, a steep decline from the previous 76.0 reading. Coupled with a
0.1% decline in the consumer price index, this added evidence of a possible economic slowdown ahead.

♦ Also, there were growing concerns about how the newly passed financial reform bill would hurt banks’ earnings
going forward.

♦ The US light sweet crude oil futures for August delivery took another setback, declining 61cents or 0.8% to
US$76.01/barrel in response to the poor US consumer sentiment report.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ As a result, the US DJIA recorded a massive pullback on Friday, plummeting 261.41 pts or 2.52% to 10,097.90,
and ended well below the crucial technical support of 10,150 and the 21-day SMA of 10,132.

♦ Recorded with a huge bearish candle following the “hangman” candles earlier, the index is likely to see more
downside ahead.

♦ Unless it can overcome the 21-day SMA and 10,150 today, the recent rebound may have ended and the index is
now ready for further retracement to the lower supports at the 10,000 psychological level and 9,700, in our view.

Nasdaq Composite (Nasdaq)

♦ Similarly, the Nasdaq Composite index breached below its important technical supports at the 21-day SMA of
2,202 and the 2,190 support level on Friday. It plunged 70.03 pts or 3.11% to end at 2,179.05.

♦ Compounded with a “double sell” signal on the short-term momentum indicators, the index is now at risk of
extending its downside momentum towards the next lower support at 2,100.

♦ Chart wise, to prevent the sentiment from turning bearish, the index must quickly rebound to above 2,190 and
the 21-day SMA.

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Daily Technical Watch:

Chart 7: Genting Daily Chart 8: Genting Intraday

Genting Bhd (3182)

Must sustain at above RM7.45 and the 10-day SMA to secure further upside…

♦ Genting halted its eight-month rally and turned lower after hitting a high of RM7.87 in Oct 2009.

♦ Thereafter, the stock found difficulties to maintain at above a key resistance level at RM7.45 whenever it climbs
towards the level on strong bargain buying support.

♦ The stock touched a low of RM6.20 in Mar 2010, but since then, it has slowly climbed higher and recaptured the
RM6.80 level convincingly in Jun 2010.

♦ By late Jun, it has reached the tough resistance level at RM7.45, but due to lack of supportive buying momentum,
it failed to penetrate the technical hurdle.

♦ Last Friday, the stock surprised investors by chalking up a bullish candle, surpassing the RM7.45 level to close
handsomely at RM7.51.

♦ Technically, with the stochastic oscillators turning into a “buy”, and the 14-day RSI ticking upward, the stock is
poised to see further upside potential today.

♦ To secure the upside momentum, technically, the stock must at least maintain at above the 10-day SMA of
RM7.41 and the RM7.45 level in the immediate term.

♦ Failure to put sellers at check will dampen sentiment and prompt instant profit-taking pressure on the stock.
That, if it occurs, will void Friday’s positive chart instantaneously and lead to a pullback.

Technical Readings:

♦ 10-day SMA: RM7.408

♦ 40-day SMA: RM7.125

♦ Support: IS = RM7.45 S1 = RM6.80 S2 = RM6.00

♦ Resistance: IR = RM8.15 R1 = RM8.90

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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.

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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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“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
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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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