MARKET REVIEW

Global: Despite an unexpected Fed rate cuts towards 0.0-0.25% and and launched a new QE program, Asian markets ended mixed following a 12.9% slump on the Dow last Friday as investors remained on risk-off button. Meanwhile, European markets ended mildly higher after days of selling spree, amid hopes of more stimulus as the fast-spreading coronavirus fuels fears of an impending recession. However, Wall Street managed to rebound from the worst day since 1987 as market participants cheered White House plans that could inject USD1 trillion to the US economy to cushion the Covid-19 impact.

Malaysia: KLCI tumbled 24.1 pts or 1.9% to 1256.6 after gyrating between an intra-day high of 1278.4 and a low of 1212 as investors assessed the financial and economic fallout from the Movement Control Order imposition from 18-31 March amid exacerbation of COVID-19 in Malaysia. Trading volume decreased to 4.43bn shares worth RM3.87bn as compared to Monday’s 4.47bn shares worth RM3.69bn. Market breadth was negative with 267 gainers as compared to 713 losers.

TECHNICAL OUTLOOK: KLCI

After sliding 24.9% or 401 pts from YTD high of 1613 (7 Jan) to a low of 1212 yesterday, we may witness an oversold rebound today in line with Dow’s overnight 1049 pts or 5.3% relief rally. The MACD indicator continues to expand negatively below the zero level but we are seeing mild bottoming up signals on both the RSI and Stochastic oscillators. Key supports are 1212/1200/1150 whilst resistance is set around 1330/1369-1419 (gap down on 16 Mar) territory.

MARKET OUTLOOK

Following a 5.2% relief rally on Dow at 21237 (after nosedived 32.8% or 9689 pts to intraday low 19882 from all-time high of 29568) as Trump seeks USD1 trillion in stimulus coupled with Fed’s aggressive cut interest rates to zero and relaunched a USD700bn QE program, we may anticipate buying support to spillover on our local bourse after a 332-pt or 20.9% YTD plunge on KLCI. However, any rebound could be capped near 1300-1369 levels as investors continue to assess the financial and economic fallout from the financial and economic fallout from the Movement Control Order imposition from 18-31 March amid exacerbation of Covid-19 as two patients died and the confirmed cases surged to 673.

TECHNICAL TRACKER: OCK

Due for a technical rebound. Under this negative trading sentiment amid the ongoing Covid- 19 episode, most of the stocks have taken significant beating and we may see some potential recovery in certain stocks. In the telco sector, we noticed Perikatan Nasional (PN) commented that the NFCP, budgeted at RM21.6bn will proceed and the plans of rolling out 5G in 3Q are on schedule. Hence, it may be decent for traders to pick up some short term opportunities within telco stocks after a significant fall recently. OCK could be fitting the bill at this juncture as it has formed a hammer candle after declining 47% from the recent peak of RM0.65. Resistance is at RM0.425-0.45, followed by RM0.50. The support is set along RM0.365-0.37, while cut loss is located around RM0.35.

Source: Hong Leong Investment Bank Research - 24 Mar 2020