MARKET REVIEW

Global. Asian markets ended mixed as sentiment was dampened by a weaker -than expected lending data in China and spreading Delta variant outbreak, overshadowed a tame US inflation reading and easing fears that the Fed would begin policy normalisation soon. The Dow dropped as much as 132 pts to 35352 following an upbeat US producer prices. However, the index recouped all the losses to end 15 pts higher at a fresh record high of 35500 amid optimism that a near-term tapering was receding following a mild July CPI data on Wednesday.

Malaysia. After drifting within 1497.2-1505.3, KLCI eased 2.5 pts to 1502 as another record high local Covid-19 infections and lingering domestic political jitters forced investors to the sidelines. Losers swarmed gainers 576 to 384 on reduced turnover totalling 3.4bn shares worth RM2.5bn. In terms of fund flows, local institutions were the major buyers amounting to RM39m shares whilst foreign institutions and retailers emerged as net sellers totalling RM26m and RM13m, respectively.

TECHNICAL OUTLOOK: KLCI

After rebounding from a low of 1483 to a high of 1515, lingering concerns of local headwinds saw the index ended at 1502 yesterday. The inverted Hammer formation on 11 Aug signalled further uptrend could be affected and we reiterate that the odds would still continue to favour the bears, with key supports pegged at 1483-1474-1452 zones. Only a strong breakout above 1510-1534 hurdles would lift the benchmark out of the range bound consolidation mode to advance further toward 1545-1556-1573 zones.

MARKET OUTLOOK

Although recent announcement of a gradual reopening and relaxation for fully vaccinated individuals signal an inflection point towards economic recovery, we opine that the market would remain choppy (ST resistances: 1510-1534; supports: 1452-1474) amid prevailing speed bumps i.e. local political stalemate, elevated daily Covid-19 cases and the upcoming August reporting season. Having said that, a recovery scenario remains encouraging, 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 - 13 Aug 2021