MARKET REVIEW

Global: Tracking higher Covid-19 cases, Asian markets ended mixed as investors mulled further signs of outbreaks after the WHO said the global tally for Covid-19 has topped 9m cases while South Korea declared its resurgence a 2nd wave. Meanwhile, the Dow soared 153 pts to 26025 whilst the tech-heavy Nasdaq surged 110 pts at a record high of 10056, as investors weighed optimism over a steady recovery in the US economy against worries of soaring virus infections in half of all US states and elsewhere in the world. The sentiment was also boosted by hopes that Congress will pass another nearly USD1 trillion fiscal stimulus package this summer.

Malaysia. Ahead of a possible mid-year window dressing activities and higher Brent oil prices, KLCI rose 4 pts to record its 2nd straight gain at 1511 (a tad below the 200D SMA of 1513), led by gains in IHH, PPB, TM, AXIATA, TOPGLOV, and PBBANK. Trading volume inched up to 6.33bn shares valued at RM3.11bn against last Friday’s 6.3bn shares worth RM4.9bn. Market breadth was negative with 434 gainers as compared to 549 losers.

TECHNICAL OUTLOOK: KLCI

The KLCI rose 4 pts to record its 2nd straight gain at 1511 (a tad below the 200D SMA of 1513) after tumbling 38.8 pts WoW. We reiterate that unless the benchmark can convincingly reclaim above the 200D SMA and 1543 (LT support-turned-resistance) levels, KLCI’s near term consolidation will prevail with key major support situated at 1498 (uptrend line). Failure to hold will witness further selloff towards 1474 (30D SMA) and 1440 (100D SMA) territory.

MARKET OUTLOOK

Barring a strong reclaim above the key 200D SMA at 1513 and and 1543 (the LT resistance trend line drawn from the 1896 high), the odds still favour more consolidation ahead. A decisive breakdown of the near term support trendline at 1498 would signal a deeper correction is in place, compounded by the fluidity of local political scene and the expiry of short-selling ban on 30 June. Nevertheless, hope for a mid-year window dressing activities is likely to cushion selloff with lower support at 1470 levels. As for stock picks, KLCI blue chips like Axiata, Maybank, CIMB, GenM, Genting, Sime, MISC, Topglove and Harta should witness rotational buying interests to aid uptrend resumption ahead of the mid-year window dressing.

Source: Hong Leong Investment Bank Research - 29 Jun 2020