MARKET REVIEW

Global. Asian markets ended mixed as Beijing's crackdown fears on including online gaming, technology, property and private education companies continued to sap risk appetite. Sentiment was also dampened by worries over the spread of the Delta coronavirus variant and hawkish remarks from the Fed Vice Chair Richard Clarida’s comments about the schedule for asset tapering and interest rate hikes. Ahead of the key July jobs report tonight, the Dow surged 271 pts to 35064 amid optimism on the progress of the USD1 trillion infrastructure bill, a spate of strong corporate earnings and a further decline in weekly jobless claims, overshadowed the concerns of the spiking Covid-19 cases.

Malaysia. Despite recording another new high of 20596 in local Covid-19 cases, KLCI staged a 4.5-pt rebound, led by bargain hunting on recently bashed down plantation, telco and banking stocks following PM’s statement that he still commands majority support and will prove it by facing a motion of confidence vote in Parliament in Sep. Market breadth was positive as 517 gainers beat 435 losers (G/L ratio rose to 1.19 after below 1 in the last 8 sessions). In terms of fund flows, foreign and local investors were the major net sellers amounting to RM2m and RM37m (net sellers in the last 10 days), respectively whilst retail investors were net buyers of shares totalling RM39m.

TECHNICAL OUTLOOK: KLCI

We reiterate our negative view on the KLCI as the index is still trapped within our envisaged 1474-1534 trading band. In the short term, the odds will continue to favour the bears, unless the index can remove the 1510-1534 barriers successfully. A strong breakout above these hurdles would lift the benchmark out of the range bound consolidation mode, advancing further toward 1545-1556-1573 zones.

MARKET OUTLOOK

Without any meaningful catalysts, we opine that the odds will continue to favour the bears and any oversold rebound is likely to be short-lived, capping at 1510-1534 resistance levels amid local political stalemate, unwavering new daily Covid-19 cases and the upcoming August reporting season. Nevertheless, downside risks may be cushioned at 1452-1474 zones, given the aggressive vaccination rates to achieve the targeted 40% and 70% goals by end of Aug and Sep, as well as the government’s optimism that most states will move into Phase 4 of the NRP by Nov.

VIRTUAL PORTFOLIO POSITION-FIG1

In the wake of the market uncertainty, we decided to square off EVERGRN (3.9% loss) and TECHBND (9.3% Gain) on 5 Aug.

Source: Hong Leong Investment Bank Research - 6 Aug 2021