MARKET REVIEW

Global: Led by massive losses in India (13%), Thailand (10%) and Singapore (7.4%), Asian markets were roiled by heightened recession fears as more countries worldwide impose lockdowns and travel curbs to contain the COVID-19 pandemic. Overnight, after plummeting 38.4% from all-time high of 29568 (12 Feb) to a low of 18213 (23 Mar), the barometer rebounded as much as 908 pts to 19121 amid Fed’s plan to unleash unlimited stimulus plan to combat COVID-19 outbreak. However, the Dow reversed and finished 582 pts lower at 18592, following news that the USD2 trillion COVID-19 stimulus plan is still stuck in the Senate.

Malaysia: Following the 83.6-pt relief rally last Friday, KLCI surrendered 43.4 pts or 52% of the gains to end at 1259.9 yesterday on profit taking, as sentiment was bogged down by heightened recession fears worldwide as more countries impose lockdowns and travel curbs, as well as worries that Malaysia MCO measure could be extended. Market breadth was bearish with 161 gainers vs. 771 losers. Market traded volume stood at 2.8bn shares valued at RM2.32bn against last Friday’s 5.06bn worth RM4.06bn.

TECHNICAL OUTLOOK: KLCI

After sliding 25% or 404 pts from YTD high of 1612 (7 Jan) to a low of 1208 (19 Mar) yesterday, KLCI staged a 96-pt relief rally to a high of 1304 (20 Mar) before reducing the gains to end at 1260 yesterday. The MACD histogram has turned green while, both the RSI and Stochastic oscillators looked oversold. The oversold rebound from 1208 may have another upleg to retest 1275/1300/1320 levels. Formidable resistance is the 13 Mar gap of 1369-1419 zones. Key supports are at 1200-1220.

MARKET OUTLOOK

In the near term, KLCI is expected to remain event-driven and choppy (at the time of writing, the Dow futures jumped 200 pts as the Senate continued work to hammer out a compromise coronavirus-aid bill), given investors’ focus on the headwinds stemming from COVID-19, commodity prices crash and political chaos coupled with the MCO restriction. Besides, the FTSE Russell’s decision about keeping Malaysia in its World Government Bond Index by end March could rattle bond market and ringgit, as well as equities. Nevertheless, Bursa and SC suspension of short selling (effective 24 March to 30 April) is likely to cushion irrational selloff and support an orderly market. Key supports are 1200-1200 whilst resistances fall on 1275- 1300.

Source: Hong Leong Investment Bank Research - 24 Mar 2020