MARKET REVIEW

Global: Tracking a sharp uptrend reversal on Dow ahead of Trump’s press conference on Friday’s night, Asian markets ended mixed on 29 May amid rising US-China tensions after the latter passed a national security law perceived as curbing freedom in Hong Kong.

Ahead of Trump’s press conference on China, the Dow fell as much as 369pts amid fears that the US would consider tougher measures, including sanctions on Beijing. However, the losses were pared to 17pts at 25383 (+918 pts WoW and +1038 pts MoM) after Trump said the US would revoke Hong Kong's special treatment but stopped short of imposing new sanctions on China, keeping the U.S.-Sino trade truce intact.

Malaysia: Tracking higher markets in the Philippines (+4.8%), Thailand (+0.8%) and Indonesia (+0.8%) as investors cheered the reopening of economies and more positive development on the COVID-19 vaccine front coupled with end May portfolio rebalancing by funds, KLCI rallied 15.8 pts to 1473.4 (+36.5 pts WoW and +65.5 pts MoM). Trading volume reduced to 9.04bn shares but trading valued surged to an all-time high at RM9.31bn (as glove makers extended their record rally) against Thursday’s 6.94bn shares worth RM5.45bn. Market breadth was positive with 650 gainers as compared to 403 losers.

TECHNICAL OUTLOOK: KLCI

After staging a bullish triangle breakout and surpassed the 100D SMA (now at 1449) hurdles, KLCI ended at a 3M high of 1473.4 last Friday, a tad below the key 1460-1480 gap (9 Mar) resistance. We reiterate that a successful refill of the gap would increase the odds of one more leg up towards 1500 and 1520 (200D SMA) resistance, before profit taking kicks in. Conversely, violating key supports at 1449 and 1429 (support trendline) could suggest that the market is losing upward momentum and the bears are in the driving seat again, pushing index lower at 1400 and 1364 (38.2% FR) levels.

MARKET OUTLOOK

We expect Bursa Malaysia to engage in a cautious mode this week following recent rally (+4.6% in May and +21.9% since COVID-19 bottom) as investors pay attention to Wall St amid widening civil unrests in the US over repeated racial injustice are raising fears of new coronavirus outbreak, which may threaten the economic recovery amid a gradual lifting of lockdowns. Besides, the simmering US-China tensions and local results season are likely to weigh on sentiment. Weekly resistances are situated near 1480-1500 whilst supports fall on 1440-1460 levels.

Source: Hong Leong Investment Bank Research - 1 Jun 2020