MARKET REVIEW

Global. Taking cue from an overnight slump in Wall St, Asian markets were in a sea of red, as renewed rise in US 10Y treasury yields raised doubts about continued monetary support and global growth. Overnight, The Dow rose as much as 191 pts before ending -346 pts at 30924 after Fed Chairman Powell underwhelmed markets by refraining from pushing back more forcefully and stopped short of offering steps to curb heightened volatility against the recent spike in Treasury yields (+0.08% to 1.56%). The Dow, S&P 500 and Nasdaq Composite tumbled 1.1%, 1.3% and 2.1%, respectively.

Malaysia. Mirroring the sluggish regional markets, KLCI slipped 7.2 pts to 1581.3, as a rally in banking stocks (as BNM maintained its OPR at 1.75%) failed to arrest the pullback in rubber glove-linked stocks. Trading volume was 9.6bn shares (-1.2bn vs 3 Mar) valued at RM5.4bn (-RM0.8bn vs 3 Mar) whilst market breadth was negative with 701 losers beat 445 gainers. Yesterday, the local institutional (+RM84m, YTD:-RM2.6bn) and retail (+RM78m; YTD: +RM4.0bn) investors were the major buyers whilst foreign investors net sold RM162m (YTD: -RM1.4bn) shares after net bought RM405m in the last three days.

TECHNICAL OUTLOOK: KLCI

Yesterday’s 7.2-pt pullback saw the benchmark close a tad below 20D/30D/100D SMAs again, suggested that the market is currently indecisive and remains volatile. Unless staging a strong breakout above the downtrend line (from 1696 peak) near 1590, KLCI is likely to trapped in further downward consolidation, with key supports pegged at 1574- 1556-1520 levels. Only a clear breakout above 1590-1600 congested resistances could spur more upside towards 1618-1646 territory.

MARKET OUTLOOK

Barring a decisive breakout above the congested 1590-1600 resistances, Bursa Malaysia will remain choppy in the short term, taking cues from ongoing profit taking consolidation from Wall St and regional markets amid elevated LT bond yields and lofty equity valuations. Nevertheless, the downside risk is likely to be well-cushioned at 1556-1520 zones in anticipation of economic and corporate earnings recovery as Malaysia kicked off its vaccination program, launched the MYDIGITAL initiatives coupled with the temporary suspension on IDSS and PDT Short Sale to 29 Aug.

Source: Hong Leong Investment Bank Research - 5 Mar 2021