MARKET REVIEW

Global: Asian markets extended multi-day rallies, as re-opening of regional economies from the COVID-19 lockdowns overshadowed global concerns ranging from escalating US China standoff to violent protests in American cities coupled with the risk of the 2nd wave of infections. Overnight, a late-session rally pushed the Dow 267 pts higher at 25742 as investors looked past widespread social unrest and pandemic worries to focus instead on progress on the road to an economic recovery due to easing lockdown restrictions.

Malaysia: Led by a rebound in the most down-trodden names (such as PBBANK, GENTING, TENAGA, GENM, and AIRPORT) from a COVID-19 selloff, KLCI surged 17.6 pts to 1507.7, in tandem with regional markets as investors cheered the reopening of global economies and in anticipation of a lifting to the conditional MCO (ending 9 June). Trading volume soared to 9.63bn shares valued at RM6.21bn against Monday’s 10.3 bn shares valued at RM6.7bn. Market breadth was positive with 596 gainers as compared to 428 losers.

TECHNICAL OUTLOOK: KLCI

After successfully refilling the 1460-1480 gap (9 Mar) and above the 1500 psychological barrier, the odds are getting higher for KLCI to advance further towards our envisaged 1518 (200D SMA) zones. A decisive breakout above the 200D SMA would confirm that the bulls are in control to spur KLCI to one more leg up towards 1550 (upper channel) and 1600 psychological barriers. Conversely, violating key supports at 1448 (100D SMA) and 1429 (support trendline) could suggest that the market is taking a breather, potentially triggering another down leg to retest 1400 and 1376 (50D SMA) levels.

MARKET OUTLOOK

After refilling the 1460-1480 gap and crossed above the 1500 psychological barrier coupled with solid gains from Wall St and oil prices overnight, KLCI may creep higher towards the long-awaited 200D SMA near 1518 levels today. On stock selections, we expect glove stocks to continue an extended profit taking correction amid stratospheric valuations and steeply overbought levels after recent unprecedented rally, as more brokerage houses tighten margin financing for glove counters. Meanwhile, in wake of the robust trading activities on Bursa Malaysia, there could be trading opportunities on BURSA, N2N, EFORCE, TA and KENANGA.

Source: Hong Leong Investment Bank Research - 9 Jun 2020