MARKET REVIEW

Global. Tracking Wall St’s buoyant performance, Asian markets recovered from the previous day’s losses as investors resumed bets on economic revival stocks following bullish expectations of US 1Q21 results season, shrugging off a spike in global Covid-19 inflections that could jeopardize an economic rebound. Despite a positive weekly jobless claims data that fell to a 13M low, the Dow slid 321 pts to 33817 overnight after reports that Biden is slated to propose much higher capital gains taxes for the rich, raising the marginal income tax to 39.6% from 37% and nearly double capital gains taxes to 39.6% for people earning more than USD1 million.

Malaysia. In tandem with firmer regional markets, KLCI jumped 11.1 pts to 1607.7, led by active buying interests on index-linked glove stocks, IHH, PCHEM, KLK and PBBANK. Despite the headline gains, sentiment was mixed as 545 gainers beat 534 losers with a total of 7.9bn shares changed hands valued at RM 5.0bn. Local institutions (+RM53m; 46.7% of trading value) emerged as the major net buyers whilst retailers (-RM2m; 39.2% of trading value) joined foreigners (-RM51m; 14.1% of trading value) as the net sellers.

TECHNICAL OUTLOOK: KLCI

We expect persistent volatility unless KLCI can stage a decisive breakout above overhead hurdle at 1611 (sloping trendline from 1696). Immediate supports fall on 1598 (100D SMA) and 1585 (30W SMA), with further critical floor near 1576 (200D SMA). Only a successful breakout above 1611 will reignite a fresh rally to retest 1621-1635-1646 zones.

MARKET OUTLOOK

Tracking overnight slump on Wall St and a resurgence of Covid-19 cases in Malaysia, KLCI is likely to remain choppy in the near term. While defensive plays into healthcare should continue to shore up rubber glove-related counters, recovery plays may take a breather (after recent sharp rallies) given the spike in global coronavirus cases could derail reopening economies. Major supports are situated at 1598-1585-1576 whilst key resistances are near 1611 (downtrend resistance from 1696), 1621 (high BB) and 1646 (14 Jan high) zones.

Source: Hong Leong Investment Bank Research - 23 Apr 2021