Maybank Kim Eng sees strong end of year finish for Asean indices

Maybank Kim Eng said that after a weak performance since September, the FBMKLCI may be getting its much-needed boost.

“Since 2007, the index only closed once in negative range in December and that was in 2014.

“As such, we expect FBMKLCI to start a new recovery cycle as it heads into 2018,” said Maybank.

The index consolidated within the critical support zones between 1,700 – 1,713 before flashing a reversal signal in the form of bullish divergence between price and Relative Strength Index (RSI).

Given improving momentum, we expect the index to stage a recovery from here onwards, it said.

Maybank said the same could be seen throughout the Asean region where the stock markets are ending in style.

MSCI AC Asean (PR) USD Index (MXSO INDEX) has posted a 21.8% year-to-date return – potentially this could be higher as the index generally performs well in December.

Since the past ten years, December posted negative closings only thrice, in 2013, 2014 and 2015.

The weekly chart shows that uptrend remains intact, following the push from 658.00 in Dec 2016 before it breached significant resistance zones between 776-797.

At current levels, the index has tested the critical 61.8% Fibonacci Retracement level at 830.

Given bullish reads on both William %R and DMI indicators and backed by upward sloping 20-week and 52-week EMA line, MXSO has a good chance to test upper resistance at 867 as markets head into the new year.