MARKET REVIEW

Global. Asian markets ended moderately lower as investors await the US May CPI data (10 June) for further clues to the Fed’s next move following a lower than market-expected May employment report and Yellen’s statement that a “slightly higher” interest rate environment would be a “plus” for the Fed amid Biden’s USD4 trillion spending proposal. Wall St ended a languid session mixed with investors assess the G7’s global minimum corporate tax rate of 15% and lingering inflation fears. The Dow fell 126 pts to 34630 whilst the Nasdaq jumped 67 pts at 13881.

Malaysia. KLCI ended lower for a 2nd day, tumbling 12.1 pts to 1578.5 last Friday ahead of the long holiday weekend (Agong’s birthday holiday on 7 June). Sentiment was edgy amid nagging concerns of surging Covid-19 infections and downside risks to the local economy during Phase 1 of the FMCO (1-14 June), pending a ramp-up in vaccinations nationwide. Market breadth was bearish as losers 605 overcame 451 gainers with a total of 7.2bn shares transacted valued at RM3.6bn. Local institutions (+RM106m; 5D: -RM293m) joined retailers (+RM127m; 5D: +RM429m) as net buyers of equities whilst foreign investors net sold RM233m of equities (5D: -RM233m).

TECHNICAL OUTLOOK: KLCI

After staging a technical rebound from 1552 (YTD low), KLCI is still unable to break the congested 1600-1605 (downtrend line) barriers. Current sideways consolidation mode will prevail unless the index can surpass these hurdles successfully. Key supports are pegged at 1577-1552 zones. Only a strong close above 1600-1605 may accelerate further upside momentum to retest the 1623-1646 levels again.

MARKET OUTLOOK

While we still believe a recovery is an eventuality, the tussle between slowing economy and elevated Covid-19 infections against further widespread vaccination rollouts, abundant liquidity, and prevailing low-interest rates will continue to play out in the market. Key resistances are pegged at 1589-1600-1605 levels whilst supports are situated at 1577- 1566-1552 territory. To take a more defensive stand amid near term lockdown headwinds, HLIB’s top portfolio recommendation includes a mix of value, growth picks and yield focus i.e. MAYBANK (TP RM9.40), TENAGA (TP RM12.50), TM (TP RM7.93), TIMECOM (TP RM16.88), SUNWAY (TP RM2.11), BURSA (TP RM11.82), AXREIT (TP RM2.54), ARMADA (TP RM0.80), IJMP (TP RM2.61), MBMR (TP RM5.20), SENTRAL (TP RM0.98) and FOCUSP (TP RM1.10).

Source: Hong Leong Investment Bank Research - 8 Jun 2021