As part of BNM's plan to de-tariff motor insurance by 2016, motor insurance tariffs will be gradually revised upward from Jan 1, 2012. For more, go here & here.
Since the announcement, we have seen a steady rise in the share prices of a few weaker insurance companies, such as MAA, Kurasia & P&O. While Kurasia & P&O are general insurance companies, MAA is a composite insurance company. MAA has been rising very strongly since April 1 (no joke!)- jumping from less than RM0.80 to RM1.20 today. Now it seems that it may be selling of 70% of its composite insurance subsidiary, Malaysian Assurance Alliance to Zurich Insurance Co Ltd for RM1.2 billion. For more, go (here).
Chart 1: MAA's daily chart as at April 6, 2011 (Source: Quickcharts)
Chart 2: MAA's weekly chart as at April 4, 2011 (Source: Tradesignum)
Kurasia has yet to break above its long-term downtrend line at RM0.50. Its immediate support is at RM0.45.
Chart 3: Kurasia's weekly chart as at April 4, 2011 (Source: Tradesignum)
The technical outlook for P&O is better than Kurasia. It has broken above the downtrend line at RM0.80 on April 1. Its immediate support is the horizontal line at RM0.88 & the immediate resistance is at the horizontal line at RM0.93.
Chart 4: P&O's daily chart as at April 6, 2011 (Source: Quickcharts)
Based on the above, MAA & P&O are the stocks that are potentially tradable. My preference would be for P&O due to the bullish technical breakout. While MAA has also achieved a bullish breakout, it has gone up too much & could be due for some correction.
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