MARKET REVIEW

Global. Despite assurance from Yellen and Powell on the positive assessment of the US economic outlook and sustainable accommodative monetary, Asian markets ended mixed, as the dual-listed Chinese companies in US reacted negatively after the US SEC began rolling out of laws aimed at delisting of foreign companies due to noncompliance in auditing standards. The Dow reversed from a 349-pt slide to end 199 pts higher at 32619 as investors picked up beaten-down cyclicals and technology stocks amid upbeat view on US economy (after US weekly jobless claims drop to one-year low), strong corporate earnings and progress in aggressive rollouts of vaccines to combat the viral pandemic.

Malaysia. In tandem with weak regional peers, KLCI ended 4.7 pts lower at 1597.7, led by plantation stocks amid a 1.7% selloff in plantation index following a slide in crude oil prices. On the broader market, turnover was 6bn shares (-0.9bn shares vs Wednesday) worth RM3bn while sentiment has improved mildly as the G/L ratio rose to 0.74 from 0.69 previously. The local institutional (-RM19m; 5D: -RM51m) and foreign (-RM48m; 5D: - RM413m) investors were the major sellers whilst retailers (+RM67m; 5D: +RM362m) were the major buyers.

TECHNICAL OUTLOOK: KLCI

Tracking Wall St ongoing consolidation, KLCI continued its choppy mode as the index rose as much as 5.7 pts to 1608 before surrendering the gains to close -4.7 pts at 1597.7. Barring a strong reclaim above the 1600-1618 resistances, KLCI may potentially trade sideways to lower in the near term in the absence of fresh impetus, with key supports pegged at 1585-1569-1557 zones. On the upside, a strong breakout above 1618 will lift share prices higher towards 1635-1642-1659 zones.

MARKET OUTLOOK

Although stability returns to Wall St overnight, Bursa Malaysia may continue to witness a fresh bout of volatility (with stiff resistances at 1618-1635-1642) on the back of the lofty equity valuations, uncomfortable spike in the 10-year Treasury yields and fresh worries on Covid-19 3rd wave-infection in Europe (amid mutating virus and vaccination delays). Nevertheless, downside risk is likely to be cushioned at 1585-1569-1557 levels, underpinned by economic recovery optimism as Malaysia has kicked off its vaccination program, as well as the elevated Brent oil and FCPO prices.

On stock selection, we expect HIAPTEK (RM0.47-not rated) to form a Cup with Handle (CWH) pattern soon following a strong 2QFY21 results. An impending handle pattern breakout above RM0.50 will spur prices higher to RM0.545-0.60 upside targets. Key supports are situated at RM0.41-0.45 levels.

Source: Hong Leong Investment Bank Research - 26 Mar 2021