KUALA LUMPUR (July 25): Shares in Telekom Malaysia Bhd (TM) fell as much as 5.84% in active trade this morning, following a negative technical outlook on the stock.
At 10.54am, the counter pares some loss to trade at RM4.23 — down 22 sen or 4.94%, with 9.61 million shares done.
CIMB Research in its Trendspotter Malaysia report today called "sell" on TM, on its negative technical outlook, as it observed a negative divergence formation.
CIMB analyst Nick Foo observed that TM's share price has surged more than 70% since the stock's latest quarterly financial results showed better-than-expected earnings.
"We think that the recent spike in share prices has fully reacted to the said unexpected performance given the negative divergence formation on the indicators," he said.
He pointed out that both moving average convergence divergence (MACD) and relative strength index (RSI) are starting to decline, which is in line with the price movements.
"Traders may want to sell the stock now, with a stop placed at RM4.70. A break below RM3.91 would send prices down towards RM3.47 next," he added.
Furthermore, Bloomberg reported yesterday that Goldman Sachs analyst Miang Chuen Koh downgraded the recommendation on TM to sell from neutral.
He further said that the strong performance of Southeast Asian telecom stocks this year will be "largely unsustainable" even as central banks in the region are expected to cut interest rates.
"Our findings suggest Asean telcos have a circa 60% probability of underperforming their respective country benchmarks post rate cuts," the Goldman analyst wrote in a note on Tuesday.