MARKET REVIEW

Global. Led by a 1.9% rally on Nikkei 225 to 30084 (exceeded 30K for the 1st time since 1990) due to a strong preliminary GDP data, most Asian markets (China, Hong Kong and Taiwan markets were closed for the CNY holidays) extended their recent gains on optimism about the rollout of COVID-19 vaccines and new fiscal aid from Washington, while tensions in the Middle East drove oil to a 13-month high. Overnight, Wall St was closed for the Presidents Day holiday. Last week, all three major US indices closed at record highs, as investors remaining confident that vaccinations, additional fiscal stimulus, as well as the Fed’s dovish outlook will result in a reasonably prompt economic recovery.

Malaysia. Tracking higher regional markets and a rally in FCPO and crude oil prices, KLCI rose 8.7 pts to 1608, led by gains on MAYBANK, TENAGA, MISC, AXIATA, RHBBANK and IOICORP. Market breadth was bullish with 864 gainers vs. 339 decliners, with 10bn shares worth RM4.7bn were traded, which were mainly focused on the smallcap and lower liners. Local retailers (+RM67m) joined the foreign investors (+RM2m) as the major buyers whilst local institutional (-RM69m) investors remained as net sellers for the past 11 consecutive sessions.

TECHNICAL OUTLOOK: KLCI

Following the positive downtrend resistance breakout yesterday and closed above the 10D/20D/30D SMAs, the bulls appear to have an upper hand to advance further towards immediate key resistance at 1618 level. A successful breakout above 1618 will lift the benchmark higher towards 1628-1644 zone. On the flip side, failure to hold at the key 1600 and 1585 (10D SMA) supports would witness a resumption of a fresh round of selling pressure towards recent low at 1561 (29 Jan).

MARKET OUTLOOK

Following yesterday’s downtrend resistance breakout, KLCI is poised to gain further grounds amid firmer external tone on optimism over the Fed’s dovish outlook, huge US stimulus package, and more aggresive vaccine rollouts globally. Sentiment will also be boosted by the expectations of the National Covid-19 Immunisation Programme launch soon, which will further encourage the re-opening of various economic sectors, restore consumer sentiment, as well as boost Malaysia’s economic growth. However, the upside is likely to be capped near the 1618-1628-1644 hurdles as the 4Q20 earnings season begins

Source: Hong Leong Investment Bank Research - 16 Feb 2021