Thursday, September 29, 2016

Banking Stocks: Some Thoughts

Since the beginning of the year, CIMB and RHBBANK have been slowly rising off their low. If you look at the charts below, you can see that they tested their long-term uptrend line and then rebounded. Will CIMB and RHBBANK enter into their next upleg? That's the big question.  

Chart 1: RHBBANK's monthly chart as at Sep 28, 2016 (Source:

Chart 2: CIMB's monthly chart as at Sep 28, 2016 (Source:

In a banking sector report dated September 8, 2016, Kenanga rated the sector as neutral. In addition, it rated all the banking stocks as Market Perform, except AFFIN. The latter was rated Under Perform, which means it may perform below the market (or effectively a SELL).

From Kenanga Research

In addition to CIMB and RHBBANK which tested their respective long-term uptrend lines, we may be seeing two other banking stocks that are now testing their respective long-term uptrend lines. These stocks are AMBANK & (yes!) AFFIN. The monthly MACDs of these stocks have just crossed above the MACD signal line (or about to do so). If this happens, they may experience a similar rebound like CIMB and RHBBANK in the start of the year.

Chart 3: AMBANK's monthly chart as at Sep 28, 2016 (Source:

Chart 4: AFFIN's monthly chart as at Sep 28, 2016 (Source:

To complete my round up of the banking sector, I have to say that there is one stock that looks decidedly negative. That's MAYBANK! It may continue to slide and test the tentative long-term uptrend line support at RM6.30-6.50. Why is it so weak? I have no idea.

Chart 5: MAYBANK's monthly chart as at Sep 28, 2016 (Source:


Based on the above, I would recommend slow accumulation of AMBANK and AFFIN as well as buy on weakness for CIMB and RHBBANK. Avoid MAYBANK.


I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

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