MARKET REVIEW

Global. Asian markets ended mildly higher ahead of the widely anticipated FOMC meeting outcome (18 March 2am) as investors are keeping an eye out on any commentary from Powell on the recent run-up in yields, which have risen on bets of faster growth and inflation. After rallying 2406 pts from a low of 30547 (4 Mar) to 32953 (15 Mar), the Do w eased 127 pts at 32826 overnight, weighed down by energy and industrial stocks as investors awaited the result of the Fed’s two-day policy meeting.

Malaysia. Ahead of the FOMC meeting, KLCI was traded in a choppy mode before ending 3 pts higher at 1624 after falling as much as 6 pts intraday, supported by the active buying interests in SIME, TM, TOPGLOV, AXIATA, TENAGA and HAPSENG whilst financial, O&G, technology and gaming counters attracted selling pressures after recent rallies. Trading volume and value was higher at 11.9bn shares valued at RM5.5bn whilst market breadth turned negative (stripping its 5th day winning streak) as 724 losers thumped 457 gainers. The local institutional (-RM105m; 5D: -RM601m) and foreign (-RM21m; 5D: +RM188m) investors were the net sellers whilst local retailers (+RM127m; 5D: +RM413m) were the net buyers.

TECHNICAL OUTLOOK: KLCI

Barring a decisive fall below our envisaged 1600-1610 supports, we remain optimistic that the benchmark will retake the next 1646-1660 (200W SMA) resistances after a brief sideways consolidation, underpinned by the Harami pattern and rounding bottom formation. On the flip side, failure to keep the support levels could result in more choppiness in the short term, pressuring the index to revisit 1592-1564 levels.

MARKET OUTLOOK

Ahead of the crucial FOMC meeting, sentiment on the local bourse is expected to remain wary as investors are trying to front-run the next phase of the cycle after a sharp recovery from Covid-19 paralysis, pencilling higher inflation and expecting the timing of the beginning of a new tightening policy. Nevertheless, we believe any severe fall will be cushioned by the economic recovery optimism as Malaysia had kicked off its vaccination program and current high Brent oil and FCPO prices, coupled with the declining daily confirmed Covid-19 cases locally.

Source: Hong Leong Investment Bank Research - 17 Mar 2021