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HLBank Research Highlights

Author: HLInvest   |   Latest post: Tue, 28 Sep 2021, 10:00 AM

 

Traders Brief - To retest 1534-1556 levels on technical rebound

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MARKET REVIEW

Global. Tracking overnight rally in Wall St, Asian markets extended their gains on ECB’s dovish comments and a barrage of positive 2Q21 results, overshadowed the worries of spiking Covid-19 cases and resultant restrictive measures that may cap global economic expansion. The Dow slipped as much as 126 pts to 34673 on profit-taking after recent rallies following a jump in weekly jobless claims and rapid spread of the Covid-19 Delta variant. However, renewed buying interests on megacap tech stocks such as Microsoft and Apple ahead of their quarterly results next week saw the index ended +25 pts at 34823.

Malaysia. Tracking rebounds in Wall St and regional markets, KLCI jumped 11.1 pts to 1527.6, led by bargain hunting activities on bashed down KLCI heavyweights (25 up; 4 down), on the back of easing worries of elevated Covid-19 cases amid falling R-Naught and aggressive vaccination rates (the daily doses administered surpassed 500k yesterday). Both retailers and foreign institutions net bought RM35m and RM33m equities respectively while local investors net sold RM68m shares.

TECHNICAL OUTLOOK: KLCI

Following the slide on 8 July, the KLCI is still gyrating within the 1501-1534 range bound mode. The trend may continue for a while until the benchmark stage a successful breakout above the 1534 barrier, lifting the index higher to 1545-1556-1580 zones. Conversely, failure to defend 1500 psychological support would suggest that the bears are in control to trigger further selldown towards 1474-1490 levels

MARKET OUTLOOK

With falling R-Naught (dropped to 1.07 on 22 July from YTD peak 1.20), aggressive vaccination rates (daily doses administered reached 507k yesterday) to achieve the targeted 40% and 70% goal by end Aug and Sep and optimism that more states will move to Phase 2 of NRP in August, we expect KLCI to nudge higher towards 1534-1545-1556 levels (supports 1490-1500), supported by bottoming up technical indicators.

On stock selection, MTAG (RM0.62-Not rated) is a printing & materials converting specialist with key customers from the EMS sector. Its risk-reward profile is attractive after sliding 32% from YTD high of RM0.91 to RM0.62 yesterday amid an undemanding FY6/22 P/E at 10.1x and a strong FY20-23 EPS CAGR of 18% and attractive FY21-22 DY of 5.6-6.4%. The stock could attract buying interest, playing catch-up against EMS peers. Technically, the stock may stage a relief rally in the short term if the immediate resistances at RM 0.635-0.655 are taken out decisively, before advancing to RM0.68-0.70 zones. Key supports are pegged at RM0.54-0.595.

Source: Hong Leong Investment Bank Research - 23 Jul 2021

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