MARKET REVIEW

Global. Asian markets ended mostly higher over hopes for bigger US stimulus measures to combat the impact of COVID-19, overshadowed fears that the new Biden’s administration will continue to adopt a tough line towards China. Overnight, the Dow rallied as much as 305 pts to all-time high at 31236 before paring the gains to 258 pts at 31188. Sentiment was boosted by a good start in the Jan reporting season and Biden’s inauguration, sparking hopes for another stimulus package and smoother vaccine rollout ahead.

Malaysia. KLCI soared as much as 14.9 pts to 1616.8 as BNM kept OPR unchanged at 1.75%. However, KLCI erased all the gains to end 0.4-pt lower at 1601.5 as banking stocks eased amid BNM’s cautious tone in its monetary policy statement, triggering fears of a minimum 25bps cut in the next BNM meeting on 4 March. Market breadth was positive with 619 gainers vs 528 losers. Trading volume decreased to 5.8bn (6.8bn previously) while the value declined to RM4.4bn (RM4.8bn previously). Local retailers were the net buyers (RM79m) whilst the local institutional (-RM70m) and foreign (-RM9m) investors remained the sellers in equities.

TECHNICAL OUTLOOK: KLCI

KLCI extended its consolidation mode after falling from 1646 high (14 Jan) to 1601.5 yesterday, registering its 5th straight decline. As the benchmark is still unable to reclaim above the key 1618 support, we envisage further consolidation ahead with major supports at 1600-1588-1573 territory . Overall, only a decisive close above 1618 would augur well for a resumption in rally 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 ramifications from expanding MCO restrictions to the whole of Peninsular Malaysia and the state of emergency declaration coupled with the start of the upcoming 4Q20 reporting season.

Source: Hong Leong Investment Bank Research - 21 Jan 2021