MARKET REVIEW

Global. Asian bourses slid amid regulatory worries on technology firms after China penalised a number of internet companies including Didi, Tencent and Alibaba. Meanwhile, the resurgence of Covid-19 pandemic in many parts of Asia due to variants’ mutations and Beijing’s surprise hint at monetary easing raised worries over the health of the global economy. The Dow dived as much as 536 pts to 34145 before ending -260 pts at 34422, driven by uncertainties surrounding the pace of the US economic recovery as well as the resurgence of Covid-19 infections due to the highly infectious Delta and Lambda variants. Meanwhile, bonds rallied on a flight to safety (US 10Y Treasury yield fell 0.02% to 1.29%).

Malaysia. KLCI plunged as much as 29 pts to 1501 before ending -21.4 pts at 1508.7 amid lingering worries over fluid domestic political scene (after UMNO withdrew support for the PN with immediate effect), the elevated covid-19 infections (8868 cases yesterday were the 2 nd highest since 9020 on 29 May) and negative undertone by BNM on Malaysian economy (after it maintained the OPR at 1.75%). Retail investors (+RM133m; 5D: +RM339m) and local institutions (+RM66m; 5D: +RM42m) emerged as the major net buyers whilst foreign investors were the net sellers for a 14 th straight day (-RM299m; 5D: -RM381m).

TECHNICAL OUTLOOK: KLCI

Following sharp selloff yesterday amid the fluid political scene and spiking Covid-19 cases, the odds would favour more weakness ahead with lower supports at 1490-1500. Further breakdown below these levels would trigger a fresh selldown to 1474 and 1452 (52-week low) territory. On the upside, stiff resistances are situated at 1535-1545-1552. Reiterate risk-off mode amid escalated headwinds in the market.

MARKET OUTLOOK

Ahead of the reopening of the Parliament sitting on 26 July, the local bourse is likely to stay edgy amid corporate earnings (likely to report weaker 2Q21 earnings in Aug) and political uncertainty risks, as well as heightened local Covid-19 pandemic (Supports: 1474-1490- 1500; Resistances: 1535-1545-1552). Nevertheless, significant fall is likely to be cushioned by the aggressive vaccination rollouts

VIRTUAL PORTFOLIO POSITION-FIG1

In the wake of the heightened market volatility, we had squared off DNEX (2.1% loss) on 8 July amid weakening technicals

Source: Hong Leong Investment Bank Research - 9 Jul 2021