MARKET REVIEW

Global. Asian markets were broadly higher, taking cues from the Biden’s massive infrastructure spending plan and China strong manufacturing data for March. Overnight in Wall St, all three major indices staged a strong rebound in the wake of a promising growth in March manufacturing activities and Biden’s mammoth USD2.2 trillion infrastructure bill whilst the technology stocks were back in vogue as US 10Y Treasury yield retreated. The Dow, S&P500 and Nasdaq all rallied 0.5%, 1.2% and 1.8%, respectively.

Malaysia. Tracking higher regional markets, BNM’s optimistic stance on Malaysia economy, Bursa Malaysia kicked off the 2Q21 yesterday on a positive note as the KLCI staged a 9.1-pt technical rebound on bargain hunting activities after plunging 35.7 pts on 31 Mar. Market breadth was bullish as the G/L ratio rebounded to 2.22x (787 gainers 787 vs 354 losers) after slipping below 1x in the last three sessions. After liquidating RM338m equities on 31 Mar, foreign investors turned net buyers (+RM7m; 5D: -RM166m; 16.5% of trading value) alongside with local institutional investors (+RM2m; 5D: -RM193m; 42.8% of trading value). Meanwhile, local retail investors were the net sellers (-RM9m; 5D: +RM359m; 40.7% of trading value) after a 3-day buying spree of RM374m shares.

TECHNICAL OUTLOOK: KLCI

On the back of the bullish Harami pattern and overnight Wall St rally, KLCI may continue its relief rally from 1573 trough (31 Mar low) today. A successful reclaim above immediate resistance near 1590 (uptrend line support from 1452) and 1600 levels will temporary lift the benchmark out of the current downward consolidation. Further major hurdles are situated at 1618-1642 levels whilst supports are pegged at 1570 (200D SMA), 1557 (YTD low) and 1534 (20M SMA) levels.

MARKET OUTLOOK

In the wake of an overnight upbeat Wall St performance and Brent crude oil prices, KLCI is likely to continue its oversold rebound with trading interests likely to focus on technology and oil & gas stocks. While we remain optimistic that 2021 will be a vaccine driven recovery year, we are cognizant that headwinds such as vaccination hiccups, case resurgence, geopolitical tensions, rating downgrade risk and fluid domestic politics will bring much volatility along this recovery path. As such, we advocate a more balanced portfolio proposition comprising recovery plays (Tenaga, RHB, DRB, MBM, IJMP, FocusP), volatility (Bursa), value (Sunway, Armada) and defensives (TM, Time, Sentral).

Source: Hong Leong Investment Bank Research - 2 Apr 2021