FBMKLCI MARCHing April

March had been a very good month for our FBMKLCI. Why do i say this? In March 2017, we have a lot of big political events happening in Malaysia. Let me try to recap it. There are basically 3 big political events happening in March 2017.

On 1 March 2017,  Saudi Aramco signed an agreement with Malaysia's national oil company, PETRONAS.[1]  The related Oil and Gas counters are SENERGY, DIALOG.

Saudi Aramco signed an agreement with PETRONAS on participation in RAPID on 1 March 2017

On 22 March 2017, E-commerce giant Alibaba Group is setting up a trade and logistics hub in Malaysia's new Digital Free Trade Zone (DFTZ).[2][3][4] Jack Ma visioned to build an Electronic World Trade Platform (eWTP) - a more inclusive, free and innovative global trading platform for SMEs, the young and consumers. Jack also praised Malaysia is a business-friendly and much more efficient than he thought. The hub, expected to be launched end-2019, "will function as a centralized customs clearance, warehousing and fulfilment facility for Malaysia and the region, to deliver faster clearance for imports and exports," Alibaba said in a statement. 

The related logistics counters are, GDEX, ILB, TNLOGIS, NATWIDE, FREIGHT, COMPLET, MAHB, POS. The related software counters are EFFICEN, MPAY, SEDANIA, REV, SYSTECH, CUSCAPI, DATAPRP.

Malaysia PM and Alibaba Jack Ma in DFTZ on 22 March 2017

If you like my way of analysis and you haven't join me in my facebook, appreciate if you could like my FB page, https://www.facebook.com/gainvestor10sai/?fref=ts

Thank you^^

On 28 March 2017, Malaysia signed 6 Memorandum of Understand (MOU) with France which include energy efficiency, solar power generation, centre of excellence "Industry 4.0" and innovation and technology transfer[5]. The MOU will see the technology and knowledge transfer between both nations. The related counters are SIME, TNB, PRESBHD.

Malaysia signs 6 MOUs with France on 28 March 2017[5]

Of course, all the mentioned counters, some of them did not have a good fundamentals. I think they are just purely getting overexcited and being "goreng-ed" in the market. It is always very important to research through the companies before we make any decisions. In a time like this, any stocks we cincai buy can also go up rally. But the question is how long it will continue to rally? If without any good fundamentals, the stock might dive anytime, even with good fundamentals, the short-term theme might expired already, trapping some of the retailers or investors. Therefore, during these crazy times, we must be extra careful. Be firm with our reasoning and decisions. Do not chase the stocks, let it go when the price is already up up and away~ Save it for other more potential stocks!

When we look at the market participation, for the past 8 weeks, the Foreign Fund had been swarming in to buy our market[6]. For the whole month of March, the average transaction amount is RM2.9 Bil with total transaction amount of RM66 Bil. Foreign Fund had been actively buying in the whole March 2017, with RM4.3 Bil. Our local institutions and local retailers had been net sellers for the month with RM4.0 Bil and RM0.4 Bil respectively.

Market Participation for the past 8 weeks

March 2017 Daily Participation

When the Foreign Funds are coming in, our Ringgit Malaysia is getting stronger due to more demands. The supply and demand theory applies here. When the Foreign Funds want to invest in Malaysia, they will have to exchange their currencies to Malaysian Ringgit in order to invest. 

USD/MYR Weekly Chart[7]

From the highest 4.4995 to current 4.4142, the USD/MYR weekly chart pattern certainly looks like a descending triangle[7]. After the double bottom and ascending triangle in April 2016, the chart went up. And now, the weekly chart is having a descending triangle, most probably it will be going down to around 4.30, which i think is also aligned with the theory of supply and demand of Foreign Funds coming in. 

Monthly USD/MYR Data from Jan 2016 to March 2017[8]

Now let's look at our FBMKLCI weekly and daily chart.

FBMKLCI Weekly Chart

For weekly chart, i had drawn an uptrend channel. Now the chart is comfortably within the uptrend channel with the support at around 1,727. Take a look at the volume in March. The volumes are getting hotter and hotter. Without any special occasion, i think the weekly chart is showing us an uptrend. 

FBMKLCI Daily Chart

For daily chart, the SMA50 had crossed over SMA200, meaning to say it is in an bullish mode now. At the resistance of 1,727, the chart bullishly trampled over the resistance with a bullish engulfing. That's a very stubborn bull there. The candles are still within the uptrend channel. The MACD had cross over, maybe there will be a short term retracement with the support at 1,727, which is also aligned with the channel.

Since we are touching on the forex, lets also take a look at the Brent Crude Oil[9].

Brent Crude Oil Daily Chart

Regarding on the fundamentals, OPEC are keen to extend its deal to curb the output and ease a global glut[10]. OPEC might consider to further cut on the production. Meanwhile, we must not forget about the US shale gas. US had stepped up crude production[11], which means the supply and demand is still the same, however it depends on the number of barrels in which i do not have the data. With production cut from OPEC and non-OPEC and further production from US, the supply and demand seems to be the same. I think the oil price will remain around USD50 to USD60 for the time being. Another data we can use for reference of the oil price will be the US Crude Oil Inventories. 

Lastly, when the market is too hot about Alibaba, Saudi Aramco and France news, some investors are already collecting the election-themed stocks. Therefore, as a wind rider, we should also be performing the same thing. We can start to aim at the GLC counters and at least to have 1 or 2 election theme counters in our portfolio. The duration will be mid term until the election. Remember to research more good fundamental election stocks, and we try to foresight the potential stocks and have faith in those counters till the election period.

MARCHing April? March is a good month, marching towards April, will April be another good month? Let's wait and see and at the same time, let's ride the wind and gainvest~

If you like my way of analysis and you haven't join me in my facebook, appreciate if you could like my FB page, https://www.facebook.com/gainvestor10sai/?fref=ts

Thank you^^

Let's Ride the Wind and Gainvest

Gainvestor 10sai

2 April 2017
4.15pm

Sources:

[1]: http://gainvestor10sai.blogspot.my/2017/03/bull-market-back-backed-by-foreign-funds.html
[2]: http://gainvestor10sai.blogspot.my/2017/03/fbmklci-no-sign-of-turning-back.html
[3]: http://www.channelnewsasia.com/news/business/alibaba-to-set-up-logistics-hub-in-malaysia-s-new-digital-free/3616222.html
[4]: http://www.straitstimes.com/asia/se-asia/alibabas-jack-ma-praises-malaysian-efficiency-at-launch-of-digital-free-trade-zone
[5]: http://www.nst.com.my/news/2017/03/225001/hollande-witnesses-six-malaysia-france-b2b-deals
[6]: http://www.malaysiastock.biz/Market-Statistic.aspx?m=w
[7]: https://www.investing.com/currencies/usd-myr-advanced-chart
[8]: http://www.x-rates.com/average/?from=USD&to=MYR&amount=1&year=2017
[9]: https://www.investing.com/commodities/brent-oil-advanced-chart
[10]: http://economictimes.indiatimes.com/markets/commodities/news/oil-caps-biggest-weekly-gain-in-2017-as-opec-eyes-deal-extension/articleshow/57956512.cms
[11]: http://www.cbc.ca/news/business/oil-dollar-friday-1.4050030