MARKET REVIEW

Global. Asian markets surged following China’s upbeat industrial profits for Jan-Feb, bullish expectations of Biden’s mammoth infrastructure plan and the refloating of the gigantic ship blocking the Suez Canal. However, the gains were tempered by profit warnings from Credit Suisse and Nomura as a result of potential losses from a hedge fund’s default on margin calls. The Dow erased a 167-pt loss to close +98 pts at a record 33171, as fears of financial stocks exposure following the reported liquidation of Archegos Capital were offset by traffic resumption in the Suez Canal, expectations of Biden’s massive infrastructure plan for US infrastructure revamp as well as the rapid progress in the vaccine rollouts.

Malaysia. Ahead of the FTSE Russell decision on whether Malaysian debt will stay in the WGBI, KLCI jumped 9.9 pts to 1611.3 in tandem with regional markets with active buying interests on PCHEM, AXIATA, MAYBANK, PBBANK, TENAGA and PETGAS. Despite the headline gains, market breadth was negative as 654 losers outnumbered 431 gainers. The local institutional (-RM120m; 5D: -RM112m) investors were the major sellers whilst the retailers (+RM30m; 5D: +RM233m) and foreign (+RM90m; 5D:-RM121m) investors emerged as major buyers.

TECHNICAL OUTLOOK: KLCI

After sliding 57pts from March’s high of 1642 (10 March) to a low of 1585 (24 March low), KLCI had staged a steady rebound to finish at 1611 yesterday ahead of the 1Q21 window dressing activities. The benchmark is in a midst of forming a small triangle breakout. A successful clearance above 1618 will lift prices higher towards 1646-1658 zones. On the flipside, failure to at 1585-1600 supports will pressure KLCI to retest 1569-1557 territory.

MARKET OUTLOOK

Traffic resumption in the Suez Canal, news that Malaysia will retain its membership in the FTSE WGBI coupled with the potential 1Q21 window dressing activities could act as upside catalysts this week, as KLCI may retest 1618-1642 zones after a strong close above 1600 psychological levels. Major supports are pegged at 1600-1585-1569 levels. On stock selection, we like MFLOUR (RM0.89, not-rated) for its promising prospects following the long-term off-take agreement with US Tyson Foods, by leveraging its global marketing network to penetrate new export markets (halal and non-halal). Technically, the bullish triangle breakout yesterday may boost prices higher towards RM0.935-0.965-1.00 upside targets whilst key supports are pegged at RM0.85-0.83-0.80 levels.

Source: Hong Leong Investment Bank Research - 30 Mar 2021