MARKET REVIEW

Global. In tandem with bullish Wall St, Asian markets ended higher in early trades amid Fed’s ultra-accommodative monetary policies pledge but the gains were capped by worries over rising coronavirus cases, policy tightening in China due to robust inflation data and extended Sino-U.S. tensions after the US Commerce Department said it had blacklisted 7 supercomputing entities for assisting Chinese military efforts. Despite higher US 10Y Treasury yield (+0.04% to 1.66%) on robust March’s PPI, the Dow (+297 pts at 33800) and S&P (+32 pts at 4129) still ended at record highs as sentiment was boosted by the Fed’s dovish stance and downplayed the risk of runaway inflation, as well as positive expectations ahead of the start of 1Q21 earnings season this week.

Malaysia. KLCI notched its 3rd straight gains (+9.9pts to 1612.3), as sentiment was lifted by the Celcom-Digi mega-merger deal announcement, overshadowed pullback in glove markets after a strong rally recently. Trading volume was 6.6bn shares (-1.1bn vs previously) valued at RM4.1bn (-RM0.8bn vs previously) while market breadth turned negative as the G/L ratio eased to 0.92 from 1.12 previously.

After a strong RM151m net buying on 7 Apr, foreign investors remained net sellers for a 2nd consecutive day (-RM50m, 16.4% of trading value) whilst the local institutions (+RM36m; 45.6% of trading value) and local retailers (+RM14m; 38% of trading value) emerged as net buyers. Meanwhile, foreigners and domestic institutions were net sellers with net weekly outflows of RM11m (-RM159m previously) and RM78m (-RM173m previously), respectively, while local retailers remained the net buyers at RM89m (+RM332m previously) during the week.

TECHNICAL OUTLOOK: KLCI

After hitting a low of 1575 (6 Apr), KLCI staged a 3-day technical rebound to end at 1612.3, logging a 27-pt gain WoW. Tracking a bullish Wall St, KLCI is envisaged to advance further this week, targeting key downtrend resistance (from 52-week high1696) near 1621. Only a successful breakout above this hurdle will spur KLCI higher towards 1635-1646-1656 (200W SMA) zones. Conversely, a fall below 1600 (uptrend line from 1452) will aggravate further retracement 1590 and 1572 territory.

MARKET OUTLOOK

Tracking bullish Wall St performance, the current rebound may continue for a while longer this week as the technical indicators are on the mend. Overall, the bull needs the index to cross above 1621 (downtrend resistance from 1696) convincingly to advance to the next 1635-1646-1656 zones. Conversely, present range bound consolidation mode may prevail, with major supports are situated at 1600-1590-1572 levels.

Source: Hong Leong Investment Bank Research - 12 Apr 2021