PP 7767/09/2010(025354)

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 13 September 2010
Market Technical Reading
Further Rebound Likely…

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

Local Market Leads:

♦ Taking the positive cue from the overnight US rebound as well as the better regional sentiment, the local market
snapped the recent losing streaks by staging a mild rebound on Thursday.

♦ Despite only a half-day trading session in conjunction with the Hari Raya celebration, trading in the local market
appeared active with firm buying interest spreading across the board.

♦ Investors snapped up blue chips, IOICorp (+5sen) and AMMB (+10sen), while quality stocks like KFC (+27sen)
and TChong (+27sen) and selective lower liners, like TimeCom (+1.5sen) attracted solid buying support as well.

♦ At the close, the FBM KLCI rose for the first time in five trading days, as it added 3.64 pts or 0.25% to 1,437.78.

♦ There were 450m shares traded in the half-day session, in comparison with Wednesday’s full-day of 607m shares.
Market breadth turned positive, as advancers outnumbered decliners by 402 to 162.

Technical Interpretations:

♦ The FBM KLCI finally kicked off a technical rebound on fresh bargain-hunting support after the recent consolidation.

♦ By confirming the previous “hammer” candle with a positive candle on last Thursday, it suggests there is further
upside potential this week.

♦ But as we reiteraited earlier, its upside could be capped by the recent high of 1,441.80, due to limitation on the
short-term momentum readings.

♦ Nevertheless, should the volume and buying sentiment persist, the FBM KLCI may resume its rally towards 1,450,
before rallying further towards its all-time high of 1,524.69.

♦ Strong supports stay at the 10-day SMA of 1,429, 1,400 and 1,390.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Market sentiment on last Thursday appeared better than expected, with the FBM KLCI attempting to restore its
uptrend with a mild technical rebound.

♦ And based on the positive candle and the slight improvement on the turnover, a further rebound can be expected
in the immediate term, when more investors return after the long Hari Raya break last week.

♦ Technically, the benchmark still needs to take out the recent high of 1,441.80 with a stronger volume of within
800m – 1.0bn shares to confirm ending the recent consolidation phase.

♦ Only then, the FBM KLCI will refresh its rally to the immediate hurdle of 1,450, followed by the all-time high level
at 1,524.69.

♦ On the downside, should the index lose the 10-day SMA of 1,429, it will continue to slide on extended
consolidation. The medium-term stronghold is at 1,400 and 1,390.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 3 Sep 6 Sep 7 Sep 8 Sep 9 Sep Local Key Indices Closing
(Pts) (%)
Gainers 394 316 336 263 402 FBM KLCI 1,437.78 3.64 0.3
Losers 325 370 354 409 162 FBM 100 9,390.05 36.44 0.4
Unchanged 291 277 286 281 280 FBM ACE 3,780.65 2.91 0.1
Untraded 352 397 385 404 512 Major Overseas
Indices
Market Cap Dow Jones 10,462.77 47.53 0.5
Turnover Nasdaq 2,242.48 6.28 0.3
(mln shares) 922 744 642 607 450 S&P 500 1,109.55 5.37 0.5
Value FTSE 5,501.64 7.48 0.1
(RM mln) 1,718 1,422 1,173 1,038 861 Hang Seng 21,257.39 90.12 0.4
Jakarta Composite 3,230.89 Closed Closed
Currency Nikkei 225 9,239.17 140.78 1.5
MYR vs US Seoul Composite 1,802.58 18.22 1.0
Dollar 3.1200 3.1150 3.1230 3.1110 3.1100 Shanghai Composite 2,663.21 6.86 0.3
SET 924.57 3.08 0.3
Source: RHBInvest & Bloomberg Straits Times 3,022.28 Closed Closed
Taiwan Weighted 7,890.11 54.57 0.7
India Sensex 18,799.66 Closed Closed
Major Commodities
NYMEX Crude Oil
(US$/barrel) 76.47 2.22 3.0
MDEX CPO – Third
Month (RM/metric ton) 2,644.00 -30.00 -1.1
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:

♦ Just before the Hari Raya break, the local futures market ended slightly higher for a second day on the half-day
trading session on last Thursday.

♦ For the day, the FKLI traded within a tight 6-pt range, before the Sep contract ended with 1.00 pt or 0.07% gain
to 1,438.00 on the overall quiet trading session.

♦ This resulted in a small negative candle registered on the chart, in contrast to the previous “bullish engulfing”
candle, which had suggested a potential further recovery then.

♦ Added with the mixed momentum signals, the FKLI could undergo a mild retreat in the immediate term, if there is
no quick rebound today.

♦ Therefore, without penetrating last Thursday’s high of 1,444, the FKLI is likely to extend its recent consolidation
mode towards the 10-day SMA of 1,430, in our opinion.

♦ But, as long as the 10-day SMA is still capping its downside, we still remain bullish on the futures market’s short-
to medium-term uptrend and expect fresh bargain-hunting support to return soon.

♦ Beyond the potential immediate cap at the recent high of 1,444, the next key resistance level is seen at 1,450.

Daily Trading Strategy:

♦ Last Thursday’s lukewarm performance was in line with our expectation, but it was a total contrast to the cash
market performance.

♦ However, we are a little optimistic on the futures index’s uptrend, so long as it can sustain at above the 10-day
SMA of 1,430.

♦ For today, we expect the FKLI to trade from 1,433 to 1,445.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Sep 10 1439.00 1443.00 1437.00 1438.00 1.00 1438.00 2870 19299
Oct 10 1439.50 1442.50 1437.50 1438.00 1.00 1438.00 123 291
Dec 10 1438.00 1440.50 1435.50 1436.50 1.50 1436.50 41 396
Mar 11 1436.50 1438.00 1434.50 1435.00 1.50 1435.00 11 106

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:

♦ Backed by renewed optimism of a global economic recovery, the Wall Street extended its recent winning streak
by closing higher for a third day on last Friday.

♦ After the unexpected sharp fall in the weekly jobless claims on Thursday, it was reported that the wholesales
inventories for Jul recorded its biggest rise in two years, up by 1.3% on higher demand. Investors viewed the
latest stronger-than-expected data as a sign of an economic recovery.

♦ Also, news that Japan’s 2Q GDP grew at a 1.5% annualised rate as well as China’s larger-than-expected crude oil
imports have strengthened the global economic recovery prospects.

♦ Beside news of a stronger demand from China, crude oil prices were boosted further by news of a pipeline leak.
As a result, the US light sweet crude oil futures for Oct delivery rallied US$2.22 or 3.0% to US$76.47/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Underpinned by steady buying momentum, the US DJIA rose 47.53 pts or 0.46% to 10,462.77 on Friday.

♦ As it chalked up a third positive candle on the back of the improved short-term momentum readings, it is poised
to expand its bullish momentum in the coming days after overcoming the recent high of 10,451.15.

♦ This in turn, will pave ways for an extended rally towards the Jul high of 10,719.94 soon, before heading towards
the next key resistance barrier of 10,850.

♦ Immediate support is still at the 21-day SMA of 10,253, followed by the 10,150 level.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index added 6.28 pts or 0.28% to end at 2,242.48, extending its winning streak for a
third straight day on Friday.

♦ However, after gaining a “hangman-like” candle, following a negative candle on Thursday, a pullback risk remains
high in the near term. It must remove Thursday’s high of 2,251.98, before it can secure further upside signal.

♦ Removing an upside technical gap near 2,261.50 will lead it to the key resistance level of 2,330.

♦ On the downside, supports can be found near a technical gap of 2,200.01 and the 2,190 key support level.

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Daily Technical Watch:

Chart 7: TimeCom Daily Chart 8: TimeCom Intraday

Time dotCom (5031)

Surviving at above RM0.60 will mean a rally towards the RM0.705 - RM0.80 resistance zone…

♦ The share price of TimeCom broke out a tough resistance level at RM0.54 in Jul 2010, and kicked off a powerful
rally on follow-through buying momentum that led the stock to hitting a multi-year high of RM0.725 in Aug.

♦ As the stock failed to sustain at above the key resistance level of RM0.705, it triggered a series of strong profit-
taking activities, pressing it to below the RM0.54 level and hitting a low of RM0.485.

♦ With just a short breather, the stock recovered with another round of rally, retaking the RM0.54 level and
reversed the 10-day SMA upward to show a powerful twist on the trading momentum.

♦ It surpassed the RM0.60 resistance level last week and end handsomely at RM0.63 last Thursday.

♦ Registered with a series of positive candles, the chart is suggesting a likelihood of follow-through buying support
in the short term.

♦ Though the mild retreat on the stochastic opscillators in the “overbought” region may point to a mild pullback in
the next few session, the retreat is likely to be limited, in our opinion.

♦ If it survives at above the RM0.60 level, near the 40-day SMA on any potential retracement, buyers are expected
to return soon with a fresh rally going forward.

♦ The next upside is expected to be near the previous high of RM0.725, near the major resistance zone of RM0.705
– RM0.80.

Technical Readings:

♦ 10-day SMA: RM0.5655

♦ 40-day SMA: RM0.6004

♦ Support: IS = RM0.60 S1 = RM0.54 S2 = RM0.47

♦ Resistance: IR = RM0.705 R1 = RM0.80 R2 = RM0.94

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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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