MARKET REVIEW

Global. Asian markets ended higher amid optimism of a strong global economic recovery, thanks to the fast Covid-19 vaccines rollout, abundant policy supports from governments’ fiscal stimulus and central banks’ accommodative monetary policies. The Dow rose as much as 150 pts to an all-time high at 31608 before paring the gains to 64 pts at 31522, as sentiment was boosted by gains in cyclical sectors such as e nergy and financials on the prospect of more fiscal aid to lift the U.S. economy amid falling Covid-19 infections and a step up in vaccinations.

Malaysia. Tracking higher Asian markets, KLCI rose as much as 4.9 pts to 1613 before ending -1.9 pts to 1606.1 (snapping a 4-day winning streak), led by selldown on rubber gloves counters as sentiment was dampened by the imminent launch of the Covid-19 National Immunisation Program from 26 Feb in three phases up to Feb 22 next year. Despite the headline loss, market breadth was positive with 748 gainers against 523 losers, supported by 12.6bn shares worth RM5.79bn. Local retailers (+RM163m) were the main buyers whilst the local institutional (-RM97m, net sellers for the past 12 consecutive sessions) and foreign investors (-RM66m) were the major sellers.

TECHNICAL OUTLOOK: KLCI

Despite the downtrend resistance breakout and closed above the 10D/20D/30D SMAs on 15 Feb, KLCI is still unable to cross above 1618 resistance yesterday, indicating the tug-of wall between the bulls and bears remains in the near term. Only a successful breakout above 1618 will lift the benchmark higher towards 1629-1644 zone. On the flip side, failure to hold at the key 1600 and 1589 (10D SMA) supports would trigger a resumption of a fresh bout selling pressure towards 1561 (29 Jan low) and 1545 (200D SMA).

MARKET OUTLOOK

Despite optimism over the Fed’s dovish outlook, huge US stimulus package, falling Covid- 19 infections and the imminent launch of the Covid-19 National Immunisation Program, KLCI is still unable to cross above the key 1618 hurdle yesterday, indicating the tug -of-wall between the bulls and bears remains in the near term as the 4Q20 earnings season begins. For stocks selection, ahead of Malaysia’s Covid-19 vaccines rollout soon, we believe total logistics solutions providers companies like TASCO, TNLOGIS and DKSH will attract trading interests, as they are perceived as beneficiaries from the handling, storage and distribution of the vaccines.

Source: Hong Leong Investment Bank Research - 17 Feb 2021