MARKET REVIEW

Global. Asia markets ended lower on profit taking pullback from a three-day rally as investors exercised caution triggered by worries about policy tightening in China and mixed cues from Wall Street. Investors are also monitoring closely how scientists re-engineer their COVID-19 vaccine to be effective against the virus’ new mutations. Ahead of the US Jan jobs data report tonight, the Dow popped 332 pts to 31055 whilst both S&P 500 (+41 pts to 3871) and Nasdaq (+167 pts to 13777) climbed to record closings high overnight after recent upbeat 4Q20 results and data suggesting the labor market may be stabilizing.

Malaysia. Tracking lower regional markets, KLCI fell as much as 6.7 pts to 1576.3 before rebounding to close 1.9 pts higher at 1584.9 after PM said that Malaysia’s National Immunisation Plan will begin at the end Feb, to be rolled out in three phases up to Feb 2022, aiming to vaccinate 80% or 26.5m people in the country. On the broader market, gainers triumphed losers by 626 to 489 whilst a total of 8bn securities were traded worth RM4.2bn. Foreign (-RM18m) and local institutional (-RM87m) remained the major sellers whilst local retailers (RM105m) were the net buyers in equities.

TECHNICAL OUTLOOK: KLCI

After sliding 60.8 pts in Jan, KLCI rose for the 3rd straight sessions to finish 1.9 pts higher at 1584.9. We remain positive on KLCI near term recovery towards downtrend line at 1600 amid the bullish Harami pattern (on 2 Feb) and hook-up in technical indicators, barring any breakdown again at 1563 (the critical H&S neckline support) levels. Failure to hold at this support would trigger a deeper fall towards 1537 (200D SMA) and 1500 psychological levels, with an eventual H&S target at 1430 zones. Conversely, a successful breakout above 1600 will lift the benchmark higher towards 1618-1641 (upper BB) territory.

MARKET OUTLOOK

Tracking recent rally on Wall St and the allowance of all economic sectors to open (with tightening SOPs) coupled with the roadmap of Malaysia’s National Immunisation Plan, KLCI is likely to trend sideways but with an upside bias towards 1600 psychological barrier. However, we see stiff resistances near 1600-1618 zones amid elevated Covid-19 infections and the start of the Feb reporting season. On stocks’ selection, MAYBANK should advance further with a breakout above downtrend line at RM8.00, follow by the next RM8.20-8.45 hurdles whilst key supports are pegged at RM7.70-7.80 zones. Likewise, RHBBANK should rise further following the downtrend line breakout near RM5.20 yesterday, challenging the next hurdles at RM5.40-5.60. Key supprts are situated at RM4.90-5.00.

Source: Hong Leong Investment Bank Research - 5 Feb 2021