KUALA LUMPUR (Dec 15): The FBM KLCI could trend lower next week on some mild profit taking after being in overbought territory over the past eight trading days.
The lack of major corporate announcements would also likely keep local investors on the sidelines ahead of the penultimate weekend of the year before the Christmas holiday shortened week at most global markets.
US stocks fell on Friday as another slide in Apple took a toll and investors unloaded some shares because of the uncertainty surrounding the "fiscal cliff" negotiations, according to Reuters.
For the Nasdaq, this marked the second losing week in a row. All three major US stock indexes ended the week slightly lower, it said.
Affin Investment Bank Bhd vice president and head of retail research Dr Nazri Khan said that following the bullish performance of the local stocks with 8.3% gain year-to-date, he expects the FBM KLCI to stage a downside correction next week for a short term profit taking.
Nazri said that the FBM KLCI had broken a seven straight day of winning streak (after gaining 62 points since Nov 28) and the late day reversal may initiate downside momentum next week.
"However, the fact that the index remains above the all moving averages (20, 50 and 200 day) means the uptrend remains intact for all time frame (long term, medium term and short term), with major support now stand at 1,640 and 1,630, while major resistance stand at 1,650 and 1,680 levels.
"Aggressive bears might consider shorting FBM KLCI futures while conservative investors are recommended to buy defensive stocks like DiGi, TM, BAT, Public Bank, Petronas Dagangan and Tenaga," he said.
Meanwhile, MIDF Research in a strategy note entitled "2013: The slow journey to normalcy" said that the market in 2012 had been benign to investors apart from 3 intervening hiccups attributable to (i) "Grexit" scare, (ii) worries over impending general election, and (iii) the still unresolved US fiscal cliff.
The research house said 41% of the stocks under its h coverage outperformed the benchmark in 2012, adding that the top three spots went to MBM Resources Bhd, Hartalega Holdings Bhd, and Aeon Co (M) Bhd.
MIDF Research said that however, earnings growth prospects for the next 12 month were not as rosy, adding that the FBM KLCI was expected to log single-digit earnings growth of 9.4% year-on-year in 2013.
"Thus, expect a mildly up trending market in 2013 with intermittent spike in market volatility.
"For safe measure, keep watchful eyes on potential event risks lurking from not only Europe, US, and China but also domestically," it said.
Among the stocks that could be in focus next week are AirAsia Bhd; Digistar Corporation Bhd; Al-Hadharah Boustead REIT; and Scomi Group Bhd.
The Edge weekly in its latest edition reported that AirAsia's purchase of an additional 100 Airbus aircraft — valued at US$9.4 billion (RM30.1 billion) — is unlikely to set alarm bells ringing, unlike what happened three years ago.
It cited AirAsia CEO Tan Sri Tony Fernandes as saying that the budget carrier's regional associates were going to help pay for some of the planes ordered.
The Edge reported Fernandes as saying that the carrier's Thailand and Indonesia associates, which were now on sound financial footing, would pay for their own fleet expansion.
The Edge weekly also reported that in a bid to expand its business overseas, Digistar was now looking at its first foreign acquisition, a UK firm specialising in providing broadcasting systems and solutions.
It quoted Digistar group CEO Datuk Lee Wah Chong as saying that the company had already appointed a due diligence team to look at the acquisition of the UK firm.
"The UK is known for the best broadcasting companies in the world and this will help us expand within Europe and the Asia-Pacific region," it quoted Lee as saying.
Al-Hadharah REIT registered a surplus of RM19.96 million from the latest revaluation of the group's 15 oil palm plantation assets across the country.
In a statement to Bursa Malaysia last Friday, Al-Hadharah REIT said the surplus is a 1.6% increase against the unaudited net book value of RM1.28 billion for the assets as at Sept 30 this year.
"Based on the unaudited financial statements of the fund as at Sept 30 2012, the net asset value per unit of the fund of RM1.783 will increase to RM1.8149 per unit upon incorporation of the revaluation surplus," the company said.
Meanwhile, Scomi has received the approval from Securities Commission (SC) for the proposed issuance of RM110 million redeemable convertible secured bonds to IJM Corporation Bhd.
In a filing to Bursa Malaysia Securities on Dec 14, Scomi said it had received the approval via a letter from the SC dated Dec 13.
The proposed bond issuance is part of the corporate restructuring exercise undertaken by the group, which will see IJM emerge as the largest single shareholder in Scomi with 25% stake.