MARKET REVIEW

Global. Asian markets ended mostly higher as sentiment was boosted by Fed’s dovish stance and Biden’s massive USD1.8tr stimulus proposals. The S&P 500 closed at record high (+28pts at 4211) while Nasdaq and Dow jumped 31 pts to 14082 and 240 pts to 34060, respectively following strong earnings from technology mammoths, bullish 1Q21 GDP, and the reassurance by Fed to keep monetary policy accommodati ve over a prolonged period.

Malaysia. Tracking higher regional markets in anticipation that Fed will maintain its dovish stance, KLCI ended +1.8 pts at 1608.5 on Wednesday after falling as much as 8.9 pts intraday, as gains in PCHEM, KLK, GENTING, GENM and CIMB offset profit taking pullback by glove heavyweights. Market breadth was negative as 586 losers beat 457 gainers with a total of 6.6bn shares transacted worth RM3.9bn. Local institutions (-RM14m; 44.9% of trading value) joined foreign investors (-RM80m; 14.5% of trading value) as the major net sellers whilst retailers (+RM94m; 40.6% of trading value) were the net buyers for a 3rd straight day.

TECHNICAL OUTLOOK: KLCI

Tracking bullish Wall St performance, KLCI is envisaged to recapture above the key barrier at 1610 (downtrend line from 1696 high) again today. A successful clearance above the downtrend line would confirm the next rally is underway towards 1621-1646 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 towards 1585 (30W SMA) and 1577 (200D SMA) zones.

MARKET OUTLOOK

KLCI could extend a mild rebound towards 1621 (top BB) today following a buoyant Wall St driven by a dovish Fed, robust US corporate earnings and GDP growth, Biden’s huge infrastructure bill, and aggressive vaccinations. However, further rebound may be capped by worries of resurgence in local Covid-19 cases and slow vaccinations. For stock selection, we like BURSA (HLIB Research-BUY-TP RM11.82) as a safe-haven which also offers resilient earnings, attractive dividend yield (~4%) and inexpensive valuations against regional peers. The stock should attract buyers for an imminent downtrend line breakout, supported by bottoming up technical. A decisive breakout above RM8.64 (200D SMA) will spur further upside towards RMRM8.78 (30D SMA) and RM9.00 psychological levels. Key supports are pegged at RM8.40-8.30-8.20 zones.

Source: Hong Leong Investment Bank Research - 30 Apr 2021