MARKET REVIEW

Global. Tracking higher Wall St in anticipation of approval of the US infrastructure bill, Asian markets ended higher as investors snapped up recently bashed down stocks battered by China’s regulatory crackdown, countering worries about surging Covid-19 cases and debates on central bank asset tapering. Overnight, the Dow (+0.5% to 35265) and S&P 500 (+0.1% to 4436) ended at record highs, boosted by the US Senate passing a USD1 trillion infrastructure bill (pending House of Representatives for further approval). Meanwhile, the US 10Y treasury yields rose 0.03% to 1.35% amid Fed’s tapering talk, pushing banking stocks higher whilst dampening the tech (Nasdaq: -0.5% to 14788).

Malaysia. The KLCI up 6.9 pts to 1496.7 on 9 Aug, spurred by gains on GENTING, GENM, MRDIY, MISC and DIGI following the announcement on SOP relaxation for fully vaccinated individuals over the weekend. In terms of fund flows, local and foreign investors remained net sellers amounting to RM44m and RM22m, respectively whilst retail investors net bought shares totalling RM66m.

TECHNICAL OUTLOOK: KLCI

Following the hammer candlestick pattern on 4 Aug, we witnessed a mild bottoming out process is taking place. However, the odds would still 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 consoli dation mode, advancing further toward 1545-1556-1573 zones.

MARKET OUTLOOK

Without any meaningful catalysts, we opine that the odds will continue to remain choppy with short term stiff resistances situated at 1510-1534 territory amid prevailing speed bumps i.e. local political stalemate, unwavering new daily Covid-19 cases and the upcoming August reporting season. Nevertheless, a recovery scenario remains encouraging (key downside supports: 1452-1474), given the aggressive vaccination rates (fully vaccinated) 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.

Source: Hong Leong Investment Bank Research - 11 Aug 2021