MARKET REVIEW

Global. Led by strong gains in HSI (+1.9%), SHCOMP (+1.4%) and VNINDEX (+2.9%) bourses, most Asian markets ended higher with lackluster trades ahead of the Lunar New Year, on the heels of positive corporate news, improving virus trends and U.S. stimulus plan. Overnight, the Dow rose as much as 136 pts to all-time high at 31511 before paring the gains to 62 pts to 31437, with market sentiment generally upbeat on the prospect of fiscal stimulus and vaccine rollouts coupled with reassurance by the Fed that accommodative monetary policy would remain at a time when data shows runaway inflation worries are somewhat misplaced.

Malaysia. Tracking the record closings on US markets, KLCI staged a follow-through rebound to end 10.7 pts higher at 1596.8, with financials, plantation and O&G stocks leading the gains following ongoing rally in crude oil and FCPO prices amid the positive vaccine rollout globally. Despite the strong benchmark gains, market breadth was negative with 503 gainers vs 628 decliners, with some 4.8bn shares (-2.4bn shares on 9 Feb) worth RM3.6bn (-RM1.1bn) were traded, ahead of the long CNY holidays.

TECHNICAL OUTLOOK: KLCI

As technical indicators are on the mend, KLCI is envisaged to break the stiff downtrend line resistance near 1603 (from 1696 high) following a 2-day strong relief rally of 23.5pts to 1596.8 (above the 10D/20D SMAs). A successful breakout will lift the benchmark higher towards 1618-1634 (upper BB) zones. On the other hand, failure to surpass the key downtrend resistance would witness further consolidation, with key supports at 1563-1580 levels.

MARKET OUTLOOK

Technically, the bulls have the upper hands now to break the stiff downtrend line resistance near 1603 following a back-to-back gain of 23.5pts to 1596.8, as sentiment is boosted by the ongoing rally in crude oil and FCPO prices, a progressive roadmap of Malaysia’s National Immunisation Plan and positive comments by MOH that the number of Covid-19 cases is expected to moderate in the near term as the country’s infectivity rate (RO) falls below 1 after the MCO 2.0 extension. However, the upside is likely to remain capped by the 1618 hurdles ahead of the 4Q20 GDP announcement today and long CNY holidays (11 Feb: half-day trading; 12 Feb).

Following the announcement of its 1st tranche private placement at RM0.675, AIRASIA’s share price gained 4 sen to RM0.80 yesterday, successfully closing above the key downtrend line near RM0.75 (from RM1.00 high on 14 Dec). Current bullish trend would further strengthen if share price close above RM0.83 (10 Feb high) today, with eventual upside targets at RM0.90-1.00 zones. Key supports are pegged at RM0.70-0.71 levels.

Source: Hong Leong Investment Bank Research - 11 Feb 2021