MARKET REVIEW

Global: Wall Street ended on a negative tone (Dow: -4.4%) on the back of rising concerns over the Covid-19 outbreak in the US (confirmed cases: 163,199 and death tolls 2,850, source: WHO as of 1 Apr) could dampen the US economy moving forward and President Trump commented that US should prepare for a “very, very painful two weeks” as it is projecting between 100-240k deaths from the coronavirus. Despite Caixin/Markit Manufacturing PMI for March comming in at 50.1 (vs. 40.3 in Feb and consensus at 45.5), Shanghai Composite Index declined 0.57%. Meanwhile, Nikkei 225 plunged 4.5% after BoJ’s Tankan (big manufacturer index) March came in at -8 (lowest level since March 2013, according to Reuters).

Malaysia: In tandem with regional markets, the FBM KLCI fell 2.09% to 1,322.66 pts, accompanied by negative market breadth (decliners led advancers by a ratio of 3-to-2). Market traded volume stood at 4.74bn, worth RM2.77bn. We noticed profit taking activities emerged sharply amongst most of the stocks in the second trading session as Dow futures were falling near to 3% (Asian hours).

TECHNICAL OUTLOOK: KLCI

After retesting a few rounds near the 1,350 zone, profit taking activities have emerged and the FBM KLCI retreated by 2% yesterday. The MACD Indicator is still below zero, while the RSI is hovering below 50. Resistance is envisaged around 1,350-1,370. Meanwhile, support will be located around 1,300, followed by 1,270.

MARKET OUTLOOK

As the Dow has retraced after the recent sharp rebound (from the low of 18,213), we may anticipate selling pressure to persist on our local exchange; limiting upside potential on the KLCI. It is advised that traders deploy SELL INTO STRENGTH strategy over the near term as news flow related to Covid-19 in the Europe and US, coupled with the rising recession fear (IMF mentioned that the world has entered a recession due to the coronavirus pandemic) will still dampen the sentiment globally.

TECHNICAL TRACKER: CLOSED POSITIONS

We took profits on all the remaining technical tracker recommendations on OCK (13.9% gain), MYEG (13% gain) and KGB (18% gain) after hitting R2 targets yesterday.

Source: Hong Leong Investment Bank Research - 2 Apr 2020