KL Composite Index and Singapore ST Index updates

Kuala Lumpur Composite Index : Range Bound

Not much changes on the KLCI since my last analysis. The KLCI remained weak throughout last week. However, like other Asian markets, we may expect the KLCI to gap up today because of the sharp increase in Dow Jones Industrial Average last Friday. The Dow climbed 302.89 points or 2.65% to close at 11,734.32 points.

However, the rally is expecte to be shortlived because the equity market rallied because of declining commodity prices and not other factors. Some heavyweight component index stocks deal with commodities and the decline in price of commodities do not favour their bottom line. Therefore the KLCI is expected to have strong resistance. The KLCI is expected to sontinue to trade in a range of 1,090 points to 1,180 points. It may test the 1,180 points, but unlikely going to break above it, in my opinion.

Singapore Straits Times Index (STI): Short term rally

From my previous analysis, I mentioned that the STI is expected to test the support level at 2,800 points and the STI is now at this level (2807.54 points close last Friday). This oversold situation in the STI may cause the STI to rebound and with the increase in the Dow and declining commodity prices, a rally is also expected in the short term. It may find strong resistance at 3,000 points. The market is still bearish in the long term, like any other markets.

Analysis and Commentary by Benny Lee