MARKET REVIEW

Global. In tandem with the choppy Wall St overnight, Asian markets ended mixed as investors weighed on the gradual re-opening of global economies and a resurgence of Covid-19 infections in India and parts of the Asian countries that may derail the economic growth. Despite a surprise decline in US services activity and weaker private payroll, the Dow ended at a record high (+97 pts to 34230) while the Nasdaq lost 51 pts to 13582 as investors continued to shift from the pandemic winners to cyclical stocks as the economies are reopening and expanding.

Malaysia. KLCI tumbled 12.6 pts to 1575.7, recording its 4th consecutive decline (with 29 KLCI components were in the red) as sentiment was dampened by speculation that the re introduction of MCOs across six districts in Selangor may expand to other states, given the surging Covid-19 cases in Malaysia. Market breadth was bearish as 811 losers thumped 299 gainers (the G/L ratios fell below 1 for the 6 straight days) with a total of 7.4bn shares transacted valued at RM4.2bn. Local institutions (+RM90m; 45.2% of trading value) and retailers (+RM60m; 42.3% of trading value) were the major net buyers whilst foreign investors (-RM155m; 12.5% of trading value) remained as the major net sellers for the 6th straight Session.

TECHNICAL OUTLOOK: KLCI

Following the bearish Tweezers Top formation and multiple key SMA breakdowns, the bears are firmly in control now. This near term bearish outlook is intact (with lower supports at 1564-1557-1545 levels) as long as the downtrend resistance (now at 1603) is not taken out successfully. Only a successful breakout above 1603 would confirm the next rally is underway towards 1622-1642-1654 (200W SMA) barriers.

MARKET OUTLOOK

Ahead of the BNM meeting today (likely to stand pat with its OPR at a record -low 1.75% for a 5th straight meeting), we believe market to remain jittery during this May reporting season amid worries over low vaccine supplies and economic impact from a prolonged MCO due to the gravity of the local COVID-19 situation. Key supports are pegged at 1564-1557-1545 while resistances are near 1603-1622 zones. On stock selection, PESTECH is in the midst of building a bullish double bottom pattern, with key supports at RM1.00-0.95-0.91. As technical indicators are on the mend, a strong neckline resistance breakout above RM1.13 (mid BB) will spur prices higher towards RM1.20-1.30 territory.

Source: Hong Leong Investment Bank Research - 6 May 2021