MARKET REVIEW

Global. Most Asian markets ended higher amid easing bond yields and positive remarks from OECD that the global economic outlook has brightened thanks to aggressive Covid-19 vaccine rollouts and new US stimulus package. Boosted by the trifecta of mammoth fiscal stimulus (Congress finally approved the bill yesterday), ultra-easy monetary policy and an accelerating vaccination campaign, the Dow rallied 464 pts to a fresh record close of 32297. Sentiment was also helped by easing US 10Y bond yields at 1.52% (from 52 -week high of 1.63% last week) after tepid consumer price data for February calmed inflation worries. Meanwhile, the Nasdaq closed -5 pts at 13277 lower in choppy trade after rising as much as 204 pts to 13277.

Malaysia. Following higher regional bourses on increased economic recovery optimism, KLCI surged 15 pts to 2M high at 1639.8, spurred by rebounds in industrial, O&G, banks, telcos and further technical rebound in TOPGLOV. Trading volume jumped RM2.9bn to RM11bn valued at RM7.2bn (vs RM5.9bn on 9 Mar) whilst market breadth turned positive for a 2nd day as 850 gainers 850 overwhelmed 358 losers. The local institutional investors were the major sellers (-RM191m; 5D: -RM287m) whilst the retail (+RM5m; 5D: +RM163m) and foreign (+RM186m; 5D: +RM124m) investors were the net buyers.

TECHNICAL OUTLOOK: KLCI

The 58-pt robust gains in the last 4 trading sessions and bullish technical oscillators are likely to support further upside bias for the benchmark towards the 1646 and 1660 (200W SMA) upside targets, following the rounding bottom formation yesterday. On the flip side, failure to keep the 1600-1618 resistance-turned-support levels could result in more choppiness in the short term.

MARKET OUTLOOK

Underpinned by economic recovery optimism as Malaysia had kicked off its vaccination program, as well as the steady recovery in Brent oil and FCPO prices, KLCI could advance a tad further in the short term. Technically, the rounding bottom formation and record closing Dow may continue to spur KLCI higher towards 1646 (14 Jan high) and 1661 (200W SMA) whilst supports are pegged at 1600-1618 levels.

On stock selection, we like IOIPG (HLIB BUY- RM1.77 TP) as a large-cap property recovery proxy and its ability to sustain strong net margins of 20-30%, thanks to its exposure to a strong China property market and management's cost control. Moreover, the availability of Covid-19 vaccines in Malaysia will improve the company’s recovery prospects in all its business segments. Valuation is undemanding at 0.4x P/B (vs 10Y average of 0.5x) despite generating consistent earnings during the ongoing pandemic. Technically, IOIPG’s recent bullish downtrend line breakout (from 30M high of RM1.77 on 10 Dec 2020) could potentially kick start a new upswing soon towards RM1.47-1.52-1.65 zones. Key supports are situated at RM1.34-1.30. Cut loss at RM1.29.

Source: Hong Leong Investment Bank Research - 11 Mar 2021