Market review

• Taking cues from rebounds in SHCOMP and Dow, Asian markets were mostly higher as President Donald Trump’s moved towards looser regulation of the financial industry pushed Asian banks shares higher. Meanwhile, fading ‘Trump-phoria’ and rising policy execution doubts coupled with Trump administration made its preference known for a weaker dollar have spurred some of the money return to emerging markets.

• Tracking higher regional markets, KLCI gained for the 4th consecutive sessions to end 6.23 pts higher at 1,691.24 pts, boosted by bargain hunting on KLK (+66.0 sen to RM25.16), AXIATA (+13.0 sen to RM5.08), Petronas Chemical (+15.0 sen to RM7.28), MISC (+11.0 sen to RM7.47) and HLFG (+22 sen to RM15.00). Trading volume was robust at 2.63bn shares worth RM2.32bn as compared to Friday’s 1.96bn shares worth RM2.04bn, supported by bullish market breadth with 622 gainers vs 341 losers.

• The Dow fell 19.04 pts on profit taking to 20,052.42 pts amid jittery sentiment as Trump’s controversial policy announcements has inflated the odds of policy mistakes. Meanwhile, assets from Treasuries to the yen and gold advanced, with investors are still awaiting clarification on the timing and scope of promised pro-growth policies from the Trump administration coupled with potential trade wars with key trading partners.

Technical view

To retest 1,695-1,700 zones

• Following the positive closing above major SMAs and a decisive breakout above neckline resistance, KLCI is poised to retest the YTD high of 1,695 (27 Jan) and the 1,700 psychological barrier this week. On the flip side, a dip below last week’s low of 1,667.7 (2 Feb) will negate the ongoing technical rebound.

Market outlook

• On the back of positive Malaysia 4Q16 GDP announcement (16 Feb), firmer recovery in commodities prices and Ringgit coupled with a decisive neckline breakout, KLCI could retest the much-awaited 1,700 psychological barrier. However, further strong rebound may be capped by the concerns on the ongoing Feb reporting season.

• Closed position. We had closed our position on PESONA (9.1% gain) yesterday due to expiry

Source: Hong Leong Investment Bank Research - 7 Feb 2017