MARKET REVIEW

Global: Asian markets mostly ended lower on fears of the 2nd wave of coronavirus infections as more countries gradually re-open their economies. The sentiment was also dampened by heightened US-China tension after Trump said he opposed renegotiating the "Phase 1" trade deal with China. Overnight, Dow slumped 457 pts or 1.9% to 23764 amid worries over rushed reopening could spark a second wave of infections and inflict further economic damage, following a warning by Dr. Anthony Fauci that the virus is not under control yet.

Malaysia: Tracking shaky regional markets, KLCI eased 2.4 pts at 1379.9 ahead of the 1Q20 GDP today and potential no-confidence motion against the PM (on 18 May or the next Parliament sitting 13-29 July). Trading volume increased to 6.39bn shares worth RM3.73bn as compared to Friday’s 4.68bn shares worth RM2.74bn, led by active buying interests on healthcare-related stocks after WHO warns that coronavirus cases have jumped in countries that eased lockdowns prematurely.

TECHNICAL OUTLOOK: KLCI

In the absence of rerating catalysts, KLCI is expected to trend sideways with immediate support at 1370 (50D SMA). A firm close below the 50D SMA would put the bears in the driving seat again, where the index may fall to 1359 (22 Apr low) and 1340-1350 thereafter. Conversely, a strong breakout above double resistances at 1418 (18 Apr) and 1429 (20 Apr) would then revive the bulls from 1208 low (19 Mar) to re-challenge 1456 (20W SMA) and 1468 (100D SMA) zones.

MARKET OUTLOOK

Following a 14.4% relief rally from its low of 1208 (19 Mar), KLCI could experience some degree of profit taking, ahead of the 1Q20 GDP release today and expectations of a tepid 1Q20 results season coupled with concerns over potential no-confidence motion against the PM (on 18 May or the next Parliament sitting 13-29 July). We expect more range bound consolidation within 1350-1400 band.

Source: Hong Leong Investment Bank Research - 13 May 2020