MARKET REVIEW

Global. Asian markets ended mostly in the red as investors continued to stay on guard amid surging Covid-19 infections worldwide and pending the Fed policy outlook tomorrow. Ahead of the crucial FOMC meeting outlook and a deluge of corporate earnings this week, Wall St remained in a holding pattern as technology stocks stumbled ahead of earnings from Google and Microsoft, overshadowed a rise in cyclicals amid a robust consumer confidence index in April. The Dow inched up 3 pts to 33985 whilst the S&P 500 ended flat (-1 pt to 4186) and the Nasdaq dropped 48 pts at 14090.

Malaysia. Following a 3-day winning streak of 26.9 pts, KLCI slid 16.8 pts amid broad based profit taking activities on glove heavyweights. Market breadth continued to deteriorate as the G/L ratio fell to 0.61 from 1.03 on Monday and 1.20 last Friday. Across the board, trading volume reduced 1.1bn shares to 8.3bn shares worth RM5.5bn. Foreign investors were the major net sellers (-RM198m; 13.7% of trading value) whilst local retailers exceeded local institutions (+RM60m; 43% of trading value) as the major net buyers with RM138m shares, contributing 43.3% of trading value.

TECHNICAL OUTLOOK: KLCI

Ahead of the Fed policy outlook tomorrow, KLCI is expected to remain choppy after retreating below the downtrend resistance (from 1696 high) again yesterday. We reiterate our view that only a successful clearance above the downtrend line near 1609 would confirm the next rally is underway towards 1635-1646 levels before targeting the formidable 1654 (200W SMA) and 1674 (top monthly BB) barriers. On the flip side, a breakdown below the 1600 psychological levels may trigger renewed sell down to 1585 (30W SMA) and 1577 (200D SMA) zones.

MARKET OUTLOOK

Ahead of the Nuzul Al’Quran holiday tomorrow and elevated Covid-19 cases coupled with the crucial Fed policy outlook (for clues on tapering of QEs and policy tightening amid favourable economic backdrop), KLCI is likely to remain in a cautious mode after falling below the key downtrend resistance yesterday. Major supports are situated at 1600-1585 whilst resistances are pegged at 1609-1621-1635 zones.

For stock selection, we like FRONTKN (HLIB Research-BUY-TP RM3.88) for its unique exposure to leading-edge semiconductor frontend supply chain. Any price dips in the stock should attract bargain hunters looking for an oversold rebound upside to RM3.48 -3.60-3.80 levels. Immediate support is capped at RM3.25-3.10-3.00 zones.

VIRTUAL PORTFOLIO POSITION-FIG1

In the wake of the jittery market, we decided to take profit on HIAPTEK (10.1% gain) yesterday.

Source: Hong Leong Investment Bank Research - 28 Apr 2021