KUALA LUMPUR: Datasonic Group Bhd and My EG Services Bhd continue sliding as they breach the “oversold” territory but analysts have different stances on the two stocks.
Despite the selloff since last week, analysts maintained a bullish stance on MyEG while downgrading Datasonic to “hold” with a lower target price.
The lower target price is, however, still higher than Datasonic’s current share price.
They both joined the FTSE Bursa Malaysia KLCI fall mainly due to weak market sentiment, the analysts added.
The fall, however, was much more severe for the two stocks than the key benchmark index after they were linked with corruption and criminal charges against former deputy prime minister Datuk Seri Ahmad Zahid Hamidi.
Datasonic and MyEG lost 4.4 per cent and 7.25 per cent respectively yesterday while FBMKLCI lost 1.44 per cent or 24.87 points.
MyEG eased 10 sen to settle at RM1.28, while Datasonic lost two sen to close at 43.5 sen.
Stock market analyst Nazarry Rosli said the shares are in the “oversold” zone but are attractive for long-term traders.
“The two shares are expected to recover once the market sentiment improves. Currently, the sentiment was negative, not just for the two stocks but also the overall market,” he told NST Business.
Nazarry expects the two shares to see some respite in the short-term based on a relative strength index (RSI) indicator.
Datasonic and MyEG’s RSI have slipped below 30 since October 19, the day when the two stocks were allegedly implicated in Zahid’s charges.
Nazzary said this indicated an oversold or undervalued condition that may signal a trend change or price reversal to the upside.
RSI readings of 70 or above, on the other hand, indicated that a security was becoming overbought or overvalued, he added.
Yesterday, BIMB Securities analyst Afifah Abdul Malek reiterated a “buy” call and the target price of RM2.60 for MyEG but downgraded the call to “hold” on Datasonic with a lower target price of 50 sen from RM1.17 previously, according to Bloomberg data.
The data shows that MyEG still has four “buy” calls, two “holds” and one “sell” while Datasonic has one “buy” and one “hold”.
According to Reuters, Asian shares, including FBMKLCI, fell on Tuesday as earnings season nerves in the United States dented Wall Street, while a cocktail of negative drivers from Saudi Arabia's diplomatic isolation to concerns over Italy's budget and Brexit talks depressed sentiment.
Selling in the region erased gains made in the previous two sessions' rally, which were led by China stimulus hopes, with the MSCI's broadest index of Asia-Pacific shares outside Japan dropping 1.3 per cent, it said.