MARKET REVIEW

Global. Last Friday, Asian markets ended lower following overnight pullback in Wall St amid lofty valuations and spiking US 10Y treasury yields, fresh worries about the 3rd Covid- 19 wave in Europe as well as the tough US-China high levels talks in Alaska. The Dow tumbled 234 pts to 32628 (-0.5% WoW) after the Fed declined to extend a rule expiring at the end of the month that relaxed the supplementary leverage ratio for banks during the pandemic, stoking a sell-off in financial stocks as US 10Y bond yield retreated from 52- week high at 1.75%. Despite staging a 99-pt technical rebound to 13215, the Nasdaq still recorded a 0.8% rout WoW.

Malaysia. Tracking lower regional markets, KLCI fell as much as 12.8 pts to 1615.2 before paring the losses to 1.8 pts at 1626.2, thanks mainly to a late surge of buying interests in TOPGLOV, IHH, MAXIS, SIME, KLK and DIGI. Market breadth turned negative as 787 losers thumped 347 gainers whilst trading volume fell 0.2bn to 9bn shares valued at RM5.8n. The local institutional (+RM1m; 5D: -RM421m) and retailers local retailers (+RM127m; 5D: +RM522m) were the net buyers whilst the foreign (-RM128m; 5D: - RM101m) investors returned as major net sellers.

TECHNICAL OUTLOOK: KLCI

Barring a decisive fall below our envisaged 1600-1610 supports, the uptrend from the February lows of 1557 is still intact, targeting 1646-1660 (200W SMA) levels after a brief sideways consolidation, underpinned by the rounding bottom formation. However, failure to defend the said support levels could pose downside risks to the market in the short term, pressuring the index to revisit 1594-1566 levels

MARKET OUTLOOK

On the back of the lofty equity valuations, an uncomfortable spike in the 10-year Treasury and fresh worries of a 3rd wave of Covid-19 infections in Europe (amid mutating virus and vaccination delays), global markets may witness a fresh bout of volatility ahead as central banks struggle to hold inflation in check while sustaining uneven economic growth from the Covid-19 pandemic. Weekly resistances are pegged at 1646-1660 whilst supports are situated near 1600-1618 territory.

Source: Hong Leong Investment Bank Research - 22 Mar 2021