MARKET REVIEW

Global. Asian markets ended mildly higher following overnight bullish Wall St performance, owing to expectations of a strong 1Q21 earnings season, easing bond yields, rising vaccinations and fiscal stimulus unleashed pent-up demand. The Dow reduced its gains to 53 pts at 33731 after surging as much as 234 pts to all-time high of 33911, as the Fed's Beige Book report stoked inflation jitters, offsetting intraday optimism following bumper mega-bank earnings and Moderna’s positive update on its vaccine.

Malaysia. KLCI reversed earlier losses to end 0.6-pt higher on late buying support in selected index-linked counters i.e CIMB, SUPERMX, IOICORP, HAPSENG, Dialog, and TOPGLOV. Overall, sentiment was mixed as 510 losers beat 502 gainers, given the lack of domestic fresh catalysts and concerns of elevated Covid-19 cases and Rt locally. Foreign investors remained as the major net sellers for the 5th straight day (-RM53m, 18.3% of trading value; 5D: -RM356m) while the local institutions (+RM17m; 43% of trading value; 5D: +RM203m) and retail investors (+RM36m; 36.7% of trading value; 5D: +RM153m) emerged as the major net buyers.

TECHNICAL OUTLOOK: KLCI

We expect KLCI to extend its sideways consolidation following the breakdown below 1606 (uptrend line support from 1452) and key SMA supports of 20D/30D/100D. Major supports are pegged at 1584 (30W SMA) and 1573 (200D SMA) levels. On the flip side, a decisive reclaim above 1606 will lift the index higher towards 1616 (downtrend line from 1696), 1635 and 1646 zones.

MARKET OUTLOOK

Following the breakdown below 1606 (uptrend line support from 1452) and renewed foreign selling, KLCI could stay range bound (supports: 1584-1573-1564) as investors digested recent gains. In the short term, the bull could face stiff hurdles at 1616 (downtrend resistance from 1696) and 1635 (18 Mar high) zones, due to the lack of domestic fresh catalysts and concerns of elevated local Covid-19 cases and rising R-naught will derail a smoother economic recovery.

On stock selection, the overnight surge in oil prices to USD66/barrel may provide some trading interests among the O&G stocks. Our top pick for the sector is Armada (RM0.43- HLIB Research BUY-TP: RM0.75) for its strong FPSO business and fast improving balance sheet. Yesterday, the positive downtrend line breakout and bottoming up technical oscillators may spur prices higher to RM0.46-0.48-0.53 zones whilst supports are situated at RM0.415-0.40-0.385 levels.

Source: Hong Leong Investment Bank Research - 15 Apr 2021