MARKET REVIEW

Global. Tracking overnight Dow’s record closing, most Asian markets rose last Friday after Biden signed a USD1.9 trillion stimulus bill into law and a dovish ECB meeting triggered a temporary retreat in bond yields. The Dow powered 293 pts to 32779 (+1282 pts or +4.1% WoW) to post its 5th consecutive record high as the reflation trade continued to boost cyclical stocks following Biden’s approval of the USD1.9 trillion fiscal stimulus bill. However, the Nasdaq 100 tumbled 115 pts to 12937 (+2.2% WoW) as the rising bond yields (+0.09% to a fresh 52-week high at 1.62%) revived inflation worries and capped the appeal of high growth technology shares.

Malaysia. KLCI lost 13.7 pts at 1615.7 on persistent profit taking, led by losses in SUPERMX (-13 sen to RM4.08), CIMB (-13 sen to RM4.47), TOPGLOV (-12 sen to RM5.20), MAXIS (-6 sen to RM4.53) and IHH (-11 sen to RM5.20). Trading volume were 9.6bn shares valued at RM5.5bn (vs RM7.2bn on 9 Mar) whilst market breadth remained positive for a 4th day as 631 gainers edged 530 losers, mainly driven by the smallcaps and ACE counters. The local institutional (+RM1m; 5D: -RM423m) and retailers (+RM65m; 5D: +RM183m) investors were the net buyers whilst the foreign (-RM76m; 5D: +RM240) investors turned net sellers after three days of buying.

TECHNICAL OUTLOOK: KLCI

After registering a back-to-back decline of 24 pts and closing a tad below the 1618 levels, we have turned mildly cautious on the KLCI near term outlook, ahead of the widely anticipated FOMC meeting on 17-18 March. The Evening star pattern could signal more choppiness in the short term, with lower supports at 1600, 1589 (100d SMA) and 1562 (200D SMA) zones. Stiff resistances are pegged at 1637 (upper BB), 1646 and 1660 (200W SMA) levels.

MARKET OUTLOOK

This week, Bursa Malaysia is expected to trade in cautious mode ahead of the FOMC meeting on 17-18 March (Malaysian time), with the KCLI hovering within a range of 1590- 1637 territory amid concerns that the mammoth USD1.9 trillion stimulus could trigger inflation in the world's biggest economy and any hawkish stance from the Fed could send jitters to the market. Nevertheless, we believe any severe fall will be cushioned by the economic recovery optimism as Malaysia had kicked off its vaccination program, as well as the high Brent oil and FCPO prices.

Source: Hong Leong Investment Bank Research - 22 Mar 2021