MARKET REVIEW

Global. Asian markets rallied in the early trades in tandem with an overnight rally from Wall St but most markets pared off the gains to end mixed after a senior Chinese regulatory official warned of the risks of asset bubbles in global financial markets, further denting investor sentiment after a recent bond market sell-off. Overnight, the US markets ended lower on profit taking after Monday’s sharp rally ahead of the USD1.9 trillion fiscal package approval by Senate and Powell’s speech on the US economy tomorrow. The Dow, S&P500 and Nasdaq Composite retreated 0.5%, 0.8% and 1.7%, respectively.

Malaysia. Tracking the mixed regional markets, KLCI inched up 2.7 pts to 1569.9, erasing its early gains as persistent selloff on KLCI-linked glove stocks dampened broader market sentiment. Trading volume was 12.9bn shares valued at RM6.4bn whilst market breadth was mixed with 687 decliners compared to 485 gainers. The local institutional (-RM262m, 3rd highest selling YTD ) investors remained the major sellers whilst the local retailers (+RM22m) and foreign investors (+RM240m, 2nd highest buying YTD) were the net buyers.

TECHNICAL OUTLOOK: KLCI

Despite climbing as much as 16.3 pts to 1583.4 amid overnight Wall St’s rally, KLCI gave up most of the gains to end +2.7 pts at 1569.9. We reiterate that KLCI remains firmly below the downtrend channel from the 1696 peak. A strong close below 1554 (200D SMA) may signal more weakness ahead, targeting a test of 1520 (lower downtrend channel) and 1500 levels eventually. On the upside, only a successful breakout above the congested 1590 (downtrend line from 1696) and 1604 (50D SMA) will spur further recovery 1618-1646-1661 zones.

MARKET OUTLOOK

In the short term, Bursa Malaysia is likely to remain choppy, taking cues from recent volatilities from Wall St and regional markets amid elevated LT bond yields and lofty equity valuations coupled with the extended consolidation on KLCI-linked glove companies (shrouded by the near term negative sentiment following global Covid-19 vaccinations’ rollout). Nevertheless, we expect recovery plays should regain traction as the domestic economic recovery outlook brightens amid domestic vaccine rollouts as the country prepares to vaccinate ~70% of the population by year-end. Key supports are pegged at 1520-1554 levels whilst resistances are situated near 1590-1604-1618 zones.

Source: Hong Leong Investment Bank Research - 9 Mar 2021