Market Review

Global. Despite upbeat Chinese data and awaiting Biden’s massive ~USD2 trillion infrastructure plan announcement, Asian markets ended mixed amid worries of the spiking US 10Y Treasury yields (it hit 14M at 1.77%) and potential ripple effects caused by the Archegos Capital Management saga. Overnight, the S&P 500 (+14 pts to 3973) and Nasdaq (+201 pts to 13246) rose whilst Dow declined (-85 pts to 32981) as investors positioned themselves for Biden’s massive infrastructure plan. In March, the Dow, S&P 500 and Nasdaq climbed 6.6% (+7.8% QoQ), 4.3% (+5.8% QoQ) and 0.4% (+2.7% QoQ), respectively.

Malaysia. KLCI plunged 35.7 pts to 1573.5, losing 4.3 pts MoM and 53.8 pts QoQ. The plunge was triggered by a persistent slump in KLCI-linked glove makers and local fluid politics. Market breadth was bearish as losers thumped gainers by 858 to 302 stocks. The local retail investors were the most significant net buyers (+RM225m; 5D: -RM435m; 35.7% of trading value) followed by local institutional investors (+RM113m; 5D: -RM214m; 39.7% of trading value) whilst the foreign investors (+RM28m; 5D: +RM122m; 24.6% of trading value) were the major net sellers.

TECHNICAL OUTLOOK: KLCI

Following the bearish breakdown below the uptrend line support of 1590 from 1452 (2 Nov low) and the formation of long black candlestick yesterday, KLCI’s near term outlook has turned increasingly negative and may continue to trap in a LT downtrend channel from 1696 peak. A fall below 1569 (200D SMA) and 1557 (YTD low) supports may trigger further selldown towards 1534 (20M SMA), 1520 (lower downtrend channel) and 1500 zones. Stiff resistances are situated at 1590-1600-1618 levels.

MARKET OUTLOOK

Following the rout yesterday, KLCI’s near term outlook has turned increasingly negative and may continue to trap in a LT downtrend from 1696 peak. Further decisive selldown below 1569 (200D SMA) and 1557 (YTD low) supports may see the index sliding towards 1534 (20M SMA), 1520 (lower downtrend channel) and 1500 zones. Although we may witness a technical rebound amid oversold stochastic reading in the near term, any rebound is likely to be capped near 1590-1600-1618 zones on the back of local headwinds.

Source: Hong Leong Investment Bank Research - 1 Apr 2021