The year 2018 faced lots of challenges in terms of global equity markets performance in the first two quarters in line with the World Trade Organization projection of a slightly lower growth of 3.2% in world trade compared to 3.6% in 2017.
Despite a projected slowdown and weak performance of global equity markets the Malaysian stock market performed considerably well in the starting of 2018 but soon faced headwinds in February month. The key FTSE Bursa Malaysia KLCI index which is an indicator of the overall performance of Malaysian equity market started to give sideways movement in February 2018 which lasted till the Malaysian general election in May 2018 and dropped sharply after the election results.
However the last two quarters performance of the FTSE Bursa Malaysia KLCI index is expected to be bullish on the back of the improvement in the global market sentiments which turned negative after the stress on trade war bloomed by U.S. Tariffs implementation which is now settling off in the domestic market on the back of strong international reserves and along with well managed key interest rates is expected to play a very important role in keeping the economic growth healthy in 2018 by providing cushion from the external economic stress to the Malaysian equity market.
The key index to measure the overall performance of the Malaysian equity market the KLCI Index is trading at a very important level and showing a lot of cyclic volatility in the last month of 2017. We are expecting the KLCI to test the 1770 mark as on technical charts we can see a strong resistance zone is near this level with can hold the bulls.
On the technical ground, the benchmark KLCI index is now giving a strong bullish recovery after a long streak of continues losses triggered by negative sentries in the market due to global and domestic trade and political stress.
The KLCI index had given an impressive recovery of more than 100 points in the month of July 2018 which indicates the rejection of 1660 levels by the market. Going ahead in 2018 KLCI index is expected to test the level of 1740 in near-term and then head back to break 1800 psychological level which can result in the closing near 1870 levels by the end of this year. The recent movement in the index is indicating that the support near 1660 levels is strong and bulls had started to take over the market from here.
However, there is an expected correction in the short term in the index and the strength of the bullish movement can only be determined by the momentum of the break of recent highs by the bulls. Currently, the KLCI index is trading at a very critical level and the key support and resistance zones of 1660 and 1800 are very strong and we have to monitor the price movement and political and economic development in order to take a well-informed investment decision.
For our investors who want to invest in the Malaysian equity market Going ahead in 2018, we had shortlisted few good performing stocks with strong fundamental and technical support which have a very good potential to generate a good return in the coming future.
INARI AMERTRON BHD
Continuously topping in our stock picks Inari Amertron Bhd is still one of the most attractive stocks in Malaysian equity market with a constant growing track record form last five years. The company had posted a constant increase in margins and revenues in the last five year which makes this stock a must have in every portfolio.
On the technical ground, the stock is in a bull trend which is expected to take a short correction in near term and then again turn bullish. This counter is expected to give a closing above 3.00 levels this supported by the steady margin growth on the back of a strong order book.
AirAsia Berhad is one of the biggest players in airline industry Air Asia is one of the most attractively priced airline stocks available in the Malaysian stock market. Despite the recent fall in the index the AirAsia stocks managed to give decent movement in recent times by recovering the previous drop with continued from March to June and gave a strong bullish recovery in the month of July.
On the technical ground, the counter is expected to take a correction in near-term and then continue its short-term bullish trend and thus the price drop should be taken as an entry opportunity in this counter. The nearest breakout in AirAsia is above the level of 3.60 which an investor should consider after the corrective wave ends which will clear the future direction of this counter.
However, a deeper correction below the levels of 3.00 should be taken as a negative signal as this will indicate the strength of bears and it indicates that the bears are still in control of the market. So the price should be monitored carefully before investing in this counter-currently.
DIALOG GROUP BERHAD
With a strong earning growth Dialog is one of the most attractive counters in the Malaysian stock market. On technical term, the counter is in a strong bullish trend with is expected to continue in coming future. With recent correction, the price of the counter was last traded near the 3.20 mark and after the breakout of the level of 3.35, it is expected to reach to the level of 3.50 followed by 3.70 levels in near term.
SIME DARBY BERHAD
The Sime Darby Group is a multinational company with a wide exposure in the plantation, vehicle distribution and energy industry with the cover over 20 countries.
By keeping in mind the elevated motor business demand and the growing mining margins we are expecting SIME DERBY BERHAD to post impressive results in 2018 which can lead into the stock price target of 2.80 in near term.
On the technical ground the stock in showing rebounding signals. If the price manages to cross the near term resistance of 2.55 in near term with the good supportive volume we can expect a strong bullish movement with can push the price to the level of 2.80 in near term.