MARKET REVIEW

Global. Led by gains in HSI (+2.7%), KOSPI (+2.7%) and NIKKEI (+1.4%), Asian markets ended mostly higher in anticipation of Yellen’s testimony later in the day for clues on the Biden's commitment to market-set currency rates and to adopt maximum policy overdrive to jump-start the US economy amid the threat of COVID-19. Overnight, the Dow rose 116 to 30930 as Yellen advocated a hefty stimulus package i.e. Biden's USD1.9 trn stimulus proposal and accelerate the distribution of vaccines to help the US ride out a pandemicdriven slump, and added that the benefits of a big package outweigh the costs of a higher debt burden.

Malaysia. KLCI erased all its 8.9 pts gains earlier to fall 7.6 pts at 1601.9, led by losses on glove makers and selling pressures on banking stocks on fears of potential OPR cuts when BNM meets today. Market breadth was negative with 497 gainers vs 624 losers. Trading volume decreased to 6.8bn (7.2bn previously) while the value rose to RM4.8bn (RM4.3bn previously). Local retailers were the net buyers (RM87m) whilst the local institutional (- RM72m) and foreign (-RM15m) investors yesterday were the sellers in equities.

TECHNICAL OUTLOOK: KLCI

KLCI extended its consolidation mode after rebounded from 1573 (7 Jan low) to 1646 (14 Jan high), as the benchmark has finally broken the key 1618 support to end at 1601.9 yesterday. Overall, the benchmark needs to stay above the 1590-1600 levels, or else further selling pressure may set in next to retest 1573 (7 Jan low) and 1563 (100D SMA) zones. On the flip side, a strong reclaim above 1618 will reignite a fresh momentum towards 1636-1650-1667 hurdles.

MARKET OUTLOOK

After violating the key supports of 20D/30D/50D SMAs, KLCI is expected to extend its range bound consolidation in the near term (supports 1562-1573; resistances: 1618-1636- 1650) as investors continue to weigh on the economic impact of the MCO 2.0 (as the whole of Peninsular Malaysia now under MCO) and the state of emergency declaration coupled with the upcoming BNM meeting today.

Source: Hong Leong Investment Bank Research - 20 Jan 2021