MARKET REVIEW

Global: Asian bourses ended higher as virus-led lockdowns eased and reopened their economies coupled with expectations of further stimulus and monetary measures by the Fed and Washington to fight virus-led recession boosted sentiment. Overnight, the Dow surged 912 pts to 24597 (recouping a 646-pt slump WoW), as a rally in oil prices, more states reopening, hopes of further central bank and Washington stimulus measures, and Moderna’s success with a potential COVID-19 vaccine provided a fillip to the Wall St.

Malaysia: Tracking higher regional markets and oil prices, KLCI gained 6.7 pts to 1410.2 after hovering within 1416.9 and a low of 1405.7 band. Trading volume soared to 11.2bn shares (surpassed 13 May volume of 9.6bn) worth RM4.41bn as compared to Friday’s 9.23bn shares worth RM3.87bn. Thursday’s 7.01bn shares worth RM4.04bn, dominated by COVID-19 winners of gloves and healthcare-related companies as well as lower liners. Market breadth was positive with 592 gainers as compared to 316 losers.

TECHNICAL OUTLOOK: KLCI

In the last four weeks, KLCI was able to establish a solid supports near 1359-1367 levels, providing a good platform for further gains towards double resistances at 1418 (18 Apr) and 1429 (20 Apr) levels. Pending a positive triangle breakout, KLCI is envisaged to test 1447 (20W SMA) and 1462 (100D SMA) zones thereafter. Conversely, violating the supports at 1388 (20D SMA) and 1378 (30D SMA) could put the bears in the driving seat again, heading towards 1359 (22 Apr low) levels.

MARKET OUTLOOK

In wake of 3.9% rally on Dow and 7.1% surge on Brent oil prices overnight amid vaccine progress and stimulus hopes, KLCI could rise further to retest our envisaged 1418/1429/1447 levels in the short term, as daily and weekly technicals are on the mend. Nevertheless, profit taking consolidation may capped further upside as market is digesting recent historic trading volumes and ahead of the extended Hari Raya holidays (Bursa will be closed on 25-26 May) coupled with ongoing results season. Meanwhile, following the gradual reopening of global economies and easing lockdowns, battered tourism-related stocks such as (AIRASIA, MAHB, SHANG, GENM, GENTING) could witness some buying interests. Also, building materials stocks (eg MCEMENT, ANNJOO, MASTEEL, HUMEIND, OKA) may gather more trading momentum following the ECRL and HSR revival news.

Source: Hong Leong Investment Bank Research - 25 May 2020