MARKET REVIEW

Global. Asian markets perked up amid optimism that more imminent US stimulus and faster global Covid-19 vaccination rollouts will energise the global economic recovery, despite elevated long term treasuries yields. The Dow gave up a 172-pt rally as the gains in energy and financials on growing expectations for a sooner and stronger than expected reopening were offset by a slump in high-flying tech and a rebound in US 10Y bond yield. Ahead of Powell’s speech on the US economy tonight, the Dow, S&P500 and Nasdaq Composite retreated 0.5%, 0.8% and 1.7%, respectively.

Malaysia. Mirroring regional markets’ advance, KLCI soared 18.6 pts to 1588.5, led by a relief rally in rubber glove-linked stocks as values re-emerged following a slump in shares prices. The sentiment was also helped by a better-than-expected 4Q20 results review and the upliftment of MCOs in Selangor, Johor, Penang and KL. Trading volume was 10.8bn shares (-2.1bn vs 2 Mar) valued at RM6.2bn (-RM0.2bn vs 2 Mar) whilst market breadth was positive with 631 gainers compared to 559 losers. The local institutional (-RM157m, YTD:-RM2.6bn) investors remained the major sellers whilst the local retailers (+RM42m; YTD: +RM3.9bn) and foreign investors (+RM115m; YTD: -RM1.3bn) were the net buyers.

TECHNICAL OUTLOOK: KLCI

Following a 18.6-pt relief rally yesterday, KLCI has reclaimed above the 10D/20D/30D/100D SMAs successfully. Together with the hook-up in technical indicators, the benchmark is poised for a triangle breakout soon to advance further towards 1603- 1618-1646 zones. Conversely, failure to clear the 1590-1603 hurdles will witness further consolidation for the index with key supports at 1582-1573-1555 levels.

MARKET OUTLOOK

Unless staging a strong breakout above the congested 1590-1603 resistances as well as a sustainable recovery in KLCI-linked glove companies, Bursa Malaysia is likely to remain choppy in the short term, taking cues from recent volatilities from Wall St and regional markets amid elevated LT bond yields and lofty equity valuations. Nevertheless, downside risk is likely to be well-cushioned as Malaysia kicked off its vaccination program, launched the MYDIGITAL initiatives coupled with extended the IDSS on short selling. Key supports are pegged at 1555-1573 levels whilst stiff resistances are situated near 1618-1646 zones.

On stock selection, SCIB (RM1.73-Not-rated) looks attractive amid its grossly oversold positions (key supports are RM1.55-1.60-1.64) after sliding 43% from all-time high of RM3.08 (27 Jan). The construction outfit (sitting with a strong RM2.4bn orderbook), which is controlled by Datuk Mohd Karim Abdullah, is eyeing to take up bigger roles that include bidding for bigger infrastructure projects, embarking on mergers and acquisitions (M&As), as well as becoming project owners. A confirmed breakout above RM1.84 should spur prices higher towards RM2.00-2.13 territory.

Source: Hong Leong Investment Bank Research - 4 Mar 2021