PP 7767/09/2010(025354)

RHB Research
Malaysia Technical Research Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

Da ily T rad ing S trat egy

26 May 2010
MARKET DATELINE

Market Technical Reading

More Corrections Expected Going Forward...

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

Local Market Leads:

♦ Undermined by a series of bearish external developments, the local market suffered another steep fall to its
lowest level since mid-Feb on Tuesday.

♦ It was reported that North Korea’s army was put on alert for a possible war last week after South Korea blamed it
for sinking its warship in Mar. Separately, the US announced to conduct joint anti-submarine exercises with South
Korea yesterday. This stoked fears that a war is looming in the Korean Peninsula.

♦ Separately, in Spain, four commercial banks have proposed to merge, igniting fears that the state of Spain’s
banking industry could be worse than expected.

♦ In response, Asian markets tanked more than 2% on steep selloff in KOSPI and the US futures market. KOSPI
plummeted as much as 4.50%, before recouping its lost ground to 2.75%, while the US DJIA futures slid more
than 200 pts in the afternoon session.

♦ Locally, the FBM KLCI has continued its losing streak and closed the day 23.56 pts or 1.85% lower to 1,250.13.
Turnover expanded to 941m shares from 662m shares a day earlier. Decliners overwhelmed advancers by a ratio
of 10 to 1.

Technical Interpretations:

♦ As panic selling activities increased, the FBM KLCI hit a more than 3-month low of 1,247.85 yesterday, before
ending with an eighth bearish candle on the chart.

♦ Despite the grossly oversold short-term momentum readings and the “8 to 10 candle pattern” on the candlestick
analysis suggesting a potential technical rebound today or tomorrow, we remain bearish on the index’s outlook.

♦ Given the precarious close on the dot of 1,250, a further slip may lead to an increase in selling momentum
towards the 1,200 psychologicla level soon.

♦ Meanwhile, the immediate hurdle remains at the major support-turn-resistance level of 1,300.

Please read important disclosures at the end of this report.

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 26 May 2010

Daily Trading Strategy:

♦ In line with our expectation, upon losing the key support near 1,300 recently, the FBM KLCI headed towards the
1,250 level. The index ended at 1,250.13 yesterday.

♦ Although yesterday’s closing may indicate a small chance for a technical rebound due to the formation of the “8
to 10 candles” pattern on the chart, plus the “extremely oversold” position on the 14-day RSI – its lowest level
since Sep 2002, our view on the FBM KLCI remains unchanged.

♦ The index remains vulnerable to further downside risk. If it loses the 1,250 level, it will likely extend this
downswing to the next psychological support at 1,200.

♦ As we highlighted earlier on the futures market (FKLI), where a loss of the 1,270 level would prompt a steeper
selldown on the cash index (FBM KLCI) soon. The FKLI closed 31pts lower to 1,241 yesterday.

♦ Combined with the rising geopolitical tension in Korean Peninsula, as well as the deepening European debt crisis
on top of the cloudy recovery in the US economy, we are of the view that the local market will remain under
pressure.

♦ As such, we expect more correction ahead towards the 23.6% Fibonacci Retracement (FR) and 38.2% FR levels
from 1,229 to 1,154 region soon.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 19 May 20 May 21 May 24 May 25 May Local Key Indices Closing
(Pts) (%)
Gainers 135 250 145 252 82 FBM KLCI 1,250.13 -23.56 -1.8
Losers 689 449 678 415 846 FBM 100 8,179.73 -162.13 -1.9
Unchanged 175 274 169 285 152 FBM ACE 3,651.02 -144.30 -3.8
Untraded 379 405 384 421 293
Major Overseas
Market Cap Indices
Turnover Dow Jones 10,043.75 -22.82 -0.2
(mln shares) 782 765 886 662 941 Nasdaq 2,210.95 -2.60 -0.1
Value (RM S&P 500 1,074.03 0.38 0.0
mln) 1,403 1,415 1,764 1,287 1,787 FTSE 4,940.68 -128.93 -2.5
Hang Seng 18,985.50 -682.26 -3.5
Currency Jakarta Composite 2,514.12 -95.49 -3.7
MYR vs US Nikkei 225 9,459.89 -298.51 -3.1
Dollar 3.2510 3.2720 3.3180 3.3180 3.3610 Seoul Composite 1,560.83 -44.10 -2.7
Shanghai Composite 2,622.63 -50.79 -1.9
Source: RHBInvest & Bloomberg SET 721.29 -23.02 -3.1
FT Straits Times 2,650.61 -73.26 -2.7
Taiwan Weighted 7,086.37 -236.36 -3.2
India Sensex 16,022.48 -447.07 -2.7
Major Commodities
NYMEX Crude Oil
(US$/barrel) 68.75 -1.46 -2.1
MDEX CPO – Third
Month (RM/metric ton) 2,436.00 -54.00 -2.2
US Interest Rate Current Last Updated
Overnight Fed Fund 27-28 Apr
0-0.25% Unch
Rate 2010
Next FOMC meeting 22-23 June 2010

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 26 May 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ KL futures market suffered another blow yesterday, plunging more than 2.4%, after Asian markets crashed on
escalating fears over the geopolitical tension in Korean Peninsula and renewed problems in the European banking
systems.

♦ By recording a whooping 31.00 pts or 2.44% loss to 1,241.00, the FKLI for May contract has extended its
chances for further steep correction ahead, after falling continuously for eight straight days.

♦ Like the cash index, yesterday’s decline indicates a potential mild rebound today, due to the “8 to 10 candles”
pattern on the chart.

♦ However, the trading sentiment is more likely to stay bearish in the near term, in our opinion.

♦ Moreover, given the “extremely weak” momentum readings on the indicators, we expect the current bearish
momentum and the corrective wave to persist in the near term.

♦ Like we highlighted earlier, a fall below 1,270 will lead to a sharper fall ahead towards the 1,200 psychological
level soon.

♦ Following yesterday’s performance, the immediate resistance for the futures index has been revised lower to
1,270.

Daily Trading Strategy:

♦ In line with our expectation, the FKLI has lost the 1,270 level yesterday. This marks further selldown ahead.

♦ Traders should remain in “sell” mode. The steep correction target is aimed at 1,200.

♦ We expect the FKLI to swing from 1,229 to 1,245 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
May 10 1262.50 1263.00 1240.50 1241.00 -31.00 1241.00 14981 20059
Jun 10 1261.00 1263.00 1239.00 1239.00 -32.00 1239.00 5119 3277
Sep 10 1263.00 1263.00 1235.50 1235.50 -35.50 1236.50 378 325
Dec 10 1262.00 1262.50 1238.00 1238.50 -34.00 1237.50 122 238

Source: Bursa Malaysia

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 26 May 2010

Chart 5: US Dow Jones Industrial Average (DJIA) Daily Chart 6: US Nasdaq Composite Daily

US Market Leads:

♦ US markets staged a late recovery on Tuesday, paring down most of its early steep losses on bargain-hunting
support after a late rebound in the euro.

♦ Earlier, the major US gauges tumbled nearly 3% on escalating worries over the health of the European banking
system as well as rising tension in the Korean Peninsula.

♦ But as the euro bounced back from the 8-1/2-year low of 1.2178, to 1.2374 dollar versus the euro in the late
session, bargain-hunting activities began to kick in on view that the market is already extremely oversold after
the recent plunge.

♦ Leading the late recovery, including Goldman Sachs and material stocks, like Freeport-McMoRan Copper & Gold
Inc. and Newmont Mining Corp.

♦ On the NYMEX, the US light sweet crude oil futures for July delivery shed US$1.46 or 2.1% to US$68.75/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ The US DJIA plunged in early session yesterday, but the late recvovery helped it to recovered most of the losses,
as it closed back to above the 10,000 psychological level. It lost 22.28 pts or 0.23% to 10,043.75, off a day low
of 9,774.48. It recorded a sharp “hammer” candle on the chart to indicate a potential technical rebound today.

♦ Technically, however, it is still traded below the important support level of 10,150. The immediate chart target
remains at 9,200 – 9,700 region.

♦ For the medium-term outlook, it has to recapture the UTL and the 21-day SMA of 10,659 to return to bullishness.

Nasdaq Composite (Nasdaq)

♦ From a low of 2,140.53, the Nasdaq Composite Index launched a strong late rebound by recovering to end at
2,210.95, down only 2.60 pts or 0.12%.

♦ Closed with a huge bullish candle at above 2,190, plus a further recovery in the stochastic oscillators, the index
could try to extend its recovery in the near term.

♦ However, a failure to hold 2,190 will signal the return of fresh selling, where it could pull back further towards the
next support region of 2.000 – 2,100.

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Daily Technical Watch:
Chart 7: GenM Daily Chart 8: GenM Intraday

Genting Malaysia (4715)

Losing RM2.68 will mark a fresh downtrend ahead…

♦ The share price of GenM managed to stage a successful rally from the RM1.90 region in Mar 2009, to a high of
RM2.93 in Jun 2009, near a key resistance level of RM2.96, after a rebound from a low of RM1.84.

♦ However, after hitting a high of RM3.02 in Jul 2009, following a volatile session in Jun, the stock began a
sideways trend, where it traded rangebound from RM2.68 and RM2.96 region.

♦ After sticking within the rangebound trading trend for many months, the stock registered a bearish candle on the
chart yesterday, slipping off the key range support at RM2.68 convincingly.

♦ If it registers another candle to confirm the breakdown pattern, it will likely mark the beginning of a fresh
downtrend on the stock.

♦ That, if it happens, will also confirm the bearish medium-term signal triggered since the 10-day SMA cut below
the 40-day SMA recently.

♦ Overall, the stock is likely to retreat towards a trading range of RM2.20 to RM2.44 region on sustained selling
momentum.

♦ To recover from the damage done on the technical layout, the stock must recapture the RM2.68 level, before it
can plot a technical rebound towards the RM2.96 resistance level.

Technical Readings:

♦ 10-day SMA: RM2.784

♦ 40-day SMA: RM2.829

♦ Support: IS = RM2.44 S1 = RM2.20 S2 = RM1.90

♦ Resistance: IR = RM2.68 R1 = RM2.96 R2 = RM3.20

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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
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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
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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.

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actions of third parties in this respect.

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