Friday, July 19, 2013

Finance index has a breakout

Finance index broke above the 17000 level this week (see Chart 1). This breakout could signal the rise of two heavy weight stocks- Maybank & CIMB- which had lagged behind more agile mid-cap & small-cap banking stocks, such as AMMB, AFG & Affin.

From Chart 2 & 3, we can see that Maybank has just broken above the horizontal resistance (and recent high) at RM10.50 while CIMB is now pressing against the horizontal resistance at RM8.50.

Based on technical consideration, Maybank could be a good trading BUY. CIMB may follow suit.

Chart 1: Finance's weekly chart as at July 19, 2013_10.30am (Source: quickcharts)

Chart 2: Maybank's weekly chart as at July 19, 2013_10.00am (Source: quickcharts)

Chart 3: CIMB's weekly chart as at July 19, 2013_10.00am (Source: quickcharts)

In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Maybank & CIMB.


Yoyo said...

Dear Alex, What do you think of pansar and it's TA

Alex Lu said...

Hi Yoyo

Pansar is the successor to Ekran. Its major shareholder is Pan Sarawak Holdings Sdn Bhd; thus the name Pansar.

It markets and distributes building materials, marine and industrial engineering products, wood-engineering equipment and supplies, electrical and office automation. Its net profit for FY2013 was satisfactory at RM17.6 mil on a revenue of RM430 mil. EPS was 6.3 sen. At the close of RM0.52, it is trading at a PE of 8 times. That's fair valuation.

As its base is in Sarawak, the potential for sudden & dramatic new business cannot be excluded. That may inject some speculative flavor to the stock. However, the chart shows a very subdue trading since late 2010 (when the restructuring was completed).

An upside breakout of RM0.55-0.58 could be the start of a more exciting time for this stock.

Dav C said...

hi alex,

will the finance index contribute to RCECap?

Dav C

Alex Lu said...

Hi Dav C

I doubt RCECap will benefit much from the rise in finance index. RCEcap is losing ground to MBSB & Bank Rakyat in the mad rush to lend to the civil servants. If MBSB & Bank Rakyat were to be clammed down by Bank Negara, RCECap will also suffer the same restriction. If the economy were to slowdown, this type of non-banking financial institutions will be the first to suffer. The setback will come not from the loans to civil servants but from its other loans & advances. All in all, this niche financing sector has reached a tipping point. I see flattish growth from this point onwards and eventually a downturn.