MARKET REVIEW

Global. The MSCI Asia Ex-Japan fell 6.4 pts to 624.9 on fears of an early stimulus tapering by the Fed and the highly transmissible Delta Covid-19 variant could stifle global economic recovery. After plunging 729 pts in three days, the Dow staged a 226-pt relief rebound to 35120 despite concerns about economic growth amid rising COVID-19 cases and a widely watched central bankers meeting at Jackson Hole (26-28 Aug) for clues of the expected pace of recovery and the timeline for policy tightening.

Malaysia. Bucking sluggish regional markets, KLCI inched up 3.1 pts to 1518 as investors await the official confirmation of the next PM (by evening Friday) while new Covid-19 cases in the country also hit another fresh record high at 23564 cases. WoW, we saw minimal swings in fund flows with net selling activities by local institutions amounting to RM69m (- RM27m previously) whilst local retailers and foreigners turned net buyers with total purchases valued at RM62m (+RM147m previously) and RM7m (-RM120m previously), respectively.

TECHNICAL OUTLOOK: KLCI

After staging an oversold rebound from 1483 (4 Aug) to a high of 1526 (18 Aug), KLCI gained 3.1 pts last Friday to 1518 (+15 pts WoW). As the political risk subsides after Ismail Sabri was named as the 9th PM in Malaysia, we reckon the benchmark could stage a longawaited breakout from current range bound trade. A strong breakout above 1534 will spur more upside towards 1556-1579 zones whilst a retracement below 1511 (30D SMA) may signal further consolidation ahead with key supports pegged at 1500-1483-1474 zones.

MARKET OUTLOOK

As political risk subsides, we expect KLCI to grind higher this week after Ismail Sabri was named as the 9th PM in Malaysia. Nevertheless, the index may face stiff resistances at 1534-1556 levels (Supports: 1483-1500) as investors await the announcement of DPM and cabinet team, the Jackson Hole economic policy symposium (26-28 Aug) for clues of the potential US taper tantrum, coupled with lingering concerns over the elevated Covid-19 cases (which hopefully may peak soon as the vaccination rate continues to accelerate ) and ongoing results season.

Source: Hong Leong Investment Bank Research - 23 Aug 2021