MARKET REVIEW

Global. In the wake of a major selloff in China (-2.3%) and HK (-1.9%) markets, Asian bourses ended mostly lower amid concerns over inflation worries and lofty equity valuations, despite optimism over the approval of the USD1.9 trillion stimulus package and hopes for a stronger global economic recovery. Boosted by cyclical stocks, the Dow surged 306 pts or 0.97% to a record closing at 31802 (off all-time high of 32148), lifted by the trifecta of more fiscal stimulus, ultra-easy monetary policy and an accelerating vaccination campaign. However, concerns over rising bonds yields and excessive valuations triggered a 2.4% rout on Nasdaq to 12609 (-11% from all-time high of 14175).

Malaysia. Spurred by gains in economic recovery sectors i.e. banking, O&G, telco and gaming stocks, KLCI rallied as much as 25.7 pts to 1625.7 but persistent selloff in glove and technology companies pared off the gains to 11.7pts at 1611.8. Trading volume was 9.8bn shares (+1.8bn vs 5 Mar) valued at RM6.3bn (+RM1.2bn vs 5 Mar) whilst market breadth was negative with 647 losers vs 621 gainers. The local institutional (+RM14m; YTD: -RM2.6bn) and retail (+RM49m; YTD: +RM4.1bn) investors were the net buyers in equities whilst the foreign investors net sold RM63m (YTD: -RM1.5bn) shares.

TECHNICAL OUTLOOK: KLCI

Following a successful downtrend line breakout (now at 1584) last Friday, KLCI gapped up and surged as much as 25.7 pts to 1625.7, but strong selloff on glove stocks reduced the gains to 11.7 pts at 1611.8. With the shooting star formation yesterday, we may witness further profit taking pullback to refill the 1600-1607 gap before resuming uptrend later. Key supports are near 1584-1600 levels whilst resistances are pegged at 1618-1646 zones.

MARKET OUTLOOK

Taking cues from Wall St’s overnight mixed performance and an extended consolidation on glove stocks (ahead of TOPGLOV 2QFY21 results release at noon today) coupled with the shooting star candlestick formation yesterday, KLCI could face further profit taking pullback to refill the 1600-1607 gap before resuming its uptrend later. However, downside risk is limited (supports: 1584-1600), underpinned by economic recovery plays amid 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 - 9 Mar 2021