MARKET REVIEW

Global. Asian Markets Eased on Profit Taking as Concerns of More Countries to Re-impose Lockdowns to Contain the More Virulent Covid-19 Delta + Variants (which Are Now Circulating in at Least 80 Countries) Could Undercut a Global Economic Recovery. The Dow Rallied as Much as 186 Pts to 34469 Following An Upbeat June Consumer Confidence Report. However, the Gains Were Pared Down to +9pts at 34292 as Investors Worried About the Economic Impact of the Highly Infectious Delta Variant Outbreaks and Await the Crucial June Nonfarm Payroll Report Due on Friday, Which Could Influence Fed Policy.

Malaysia. After hovering at 1541.7-1549.3 levels, KLCI rose 3.6 pts to 1548.3 as investors weighed on the PEMULIH stimulus package and Agong’s call for Parliament to reconvene ASAP to allow lawmakers to debate the Emergency Ordinance and the National Recovery Plan. Market breadth was positive with 510 gainers vs 432 losers. Together with local institutions (-RM44m; 5D: -RM256m), foreign investors turned net sellers for the 7th

consecutive day (-RM56m; 5D: -RM470m) whilst retail investors (+RM100m; 5D: +RM581m) were the net buyers in equities.

TECHNICAL OUTLOOK: KLCI

As the KLCI continues to hover below the crucial neckline 1552 pts (support-turned resistance), we reckon that the bears still have the upper hand. A decisive breach below 1539 (YTD low) may send the index lower towards 1531 (20M SMA), 1510 (76.4% FR) and 1500 levels. On the upside, only a strong breakout above the 1552-1565-1578 congested resistances can negate the current bearish momentum. Reiterate risk-off mode amid heightened market volatility.

MARKET OUTLOOK

Following a breakdown below the crucial neckline 1552 pts (support-turned-resistance), we reckon that the bears still have the upper hand (Supports: 1539-1531-1510; Resistances 1552-1565-1578 levels) as investors continue to assess the fluid domestic politics (Agong again called for Parliament to be reconvene ASAP yesterday) and the FMCO Phase 1 extension amid elevated local Covid-19 cases. Nevertheless, downside risks should be cushioned by the RM150bn PEMULIH stimulus package and potential mid-year window dressing activities today.

Source: Hong Leong Investment Bank Research - 30 Jun 2021