MARKET REVIEW

Global. Taking cue from a 3-day slide on Dow, Asian markets ended mixed as investors digested comments from Powell that fell short of trying to rein in rising bond yields. Last Friday, the Dow tumbled as much as 158 pts before staging a 730-pt rally from the 30766 nadir to close +572 pts at 31496 (+564 pts WoW) as the stronger-than-expected Feb jobs report stoked investor bets, revived buying interests for cyclical sectors and severely beaten down tech counters. Sentiment was also boosted by the trifecta of more fiscal stimulus ahead (Senate passed the USD1.9 trillion Covid-19 relief bill on 6 Mar), ultra-easy monetary policy and an accelerating vaccination campaign.

Malaysia. Last Friday, KLCI jumped 18.9 pts to 1600.1, spurred by active buying interests on banking stocks (after BNM kept OPR unchanged on 4 Mar), oil & gas counters (after OPEC and its oil-producing allies said the group would keep production largely steady through April) and bargain hunting on steeply oversold glove stocks. Trading volume was 8.0bn shares (-1.6bn vs 4 Mar) valued at RM5.1bn (-RM0.3bn vs 4 Mar) whilst market breadth was negative with 617 losers beating 561 gainers. Last Friday, local institutional investors net sold RM84m in equities (5D: -RM591m) whilst retail (+RM42m; 5D: +RM305m) and the foreign (+RM42m; 5D: +RM286m) investors were the major buyers.

TECHNICAL OUTLOOK: KLCI

Last Friday’s successful downtrend resistance breakout to end at 1600.1 (+22.3 pts WoW) could be a precursor to further upside ahead, supported by hook-up in technical oscillators. Next overhead resistances are situated at 1618 and 1646 zones. On the flip side, a sharp pullback below 1583 (30D SMA) will trigger renewed sideways consolidation at 1575-1557- 1520 levels.

MARKET OUTLOOK

Following the relief rally from Wall St last Friday and positive breakout above the downtrend resistance, KLCI is poised to retest the next 1610-1618 hurdles (stiff resistance 1646- 1661), with economic recovery plays gaining traction on reopening optimism as Malaysia had kicked off its vaccination program and the steady recovery in Brent oil and FCPO prices.

Source: Hong Leong Investment Bank Research - 8 Mar 2021