MARKET REVIEW

Global. Last Friday, Asian markets rebounded from Thursday’s slump after the Fed said there would be no imminent move to tighten monetary policy, shrugging off worries about accelerating US inflation and worsening Covid-19 outbreaks. The Dow jumped 360 pts to 34382 (-395 pts WoW) from steep losses in the early week after US CDC eased guidelines to allow fully vaccinated people to no longer wear masks indoors and outdoors. Meanwhile, sentiment was also boosted by softer-than-expected US retail sales growth and consumer sentiment, downplaying fears of an imminent rate hike.

Malaysia. Mirroring a dismal Wall St performance and nationwide MCO 3.0, KLCI fell as much as 4.6 pts before regaining ground to end +4.9 pts at 1582.5 (-5 pts WoW) in a half day trading session on 12 May (ahead of the Hari Raya holidays on 13 & 14 May). Active buying interests were seen in glove heavyweights (on a new wave of Covid-19 cases worldwide) and banking stocks (boosted by positive PBBANK 1Q21 results and higher bond yields). Market breadth turned positive as 582 gainers beat 361 losers, with a total of 2.6bn shares transacted valued at RM1.9bn.

In the holiday-shortened week ending 12 May, foreign investors net sold RM135m shares (vs -RM336 previously) whilst local retailers and institutions net bought RM95m (vs +RM225 previously) and RM16m (vs +RM40m previously) in equities, respectively.

TECHNICAL OUTLOOK: KLCI

There is no change to our short to mid-term range bound consolidation mode (4-8 weeks) for KLCI, with regular pockets of volatility. Stiff resistances are situated at overhead 1600- 1623 levels. Only a successful breakout above these hurdles will spur a new rally towards 1642-1652-1670 territory. Conversely, failure to find support at 1577 (200D SMA) will accentuate a bearish move towards 1564-1556-1534 levels.

MARKET OUTLOOK

Taking cue from a relief rally in Wall St, KLCI may continue its technical rebound this week, underpinned by bargain hunting activities on the glove, technology and banking stocks. However, any rebound may be capped near 1600-1605-1623 levels (key supports 1550- 1577) as MCO 3.0, slow vaccinations, elevated Covis-19 cases, and heightened geopolitical tensions in the Middle East could consequently dampen near-term sentiment as we are entering the peak of the May reporting season.

Source: Hong Leong Investment Bank Research - 17 May 2021