MARKET REVIEW

Global. Tracking a rally on Wall Street, MSCI Asia Ex-Japan surged 2.2% to 648 amid bargain-hunting interests on technology stocks after news that the US FDA granted full approval to the Pfizer/BioNTech Covid-19 vaccine, and easing worries about an imminent tapering of stimulus by the Fed. Ahead of the Jackson Hole symposium (26-28 Aug), the Dow inched up 0.1% to 35366 whilst the S&P 500 (+0.1% to 4486) and the Nasdaq (+0.5% to 15019) ended at all-time closing highs, boosted by the full FDA approval of Covid-19 vaccines and reducing concerns about an imminent change in its accommodative monetary stance. Sentiment was also cheered by the House of Representatives approval of USD3.5tn budget resolution and advanced a USD1tn bipartisan infrastructure bill.

Malaysia. KLCI skyrocketed 30.9 pts to 1553.4, lifted by banking and plantation stocks as sentiment was cheered by abated political risk and investors’ confidence in policy continuity, as well as hopes that Covid-19 cases in the Klang Valley may have peaked due to the recent vaccination ramp-up. In terms of fund flows, local institutions and retailers logged net selling activities amounting to RM105m (5D: -RM58m) and RM48m (5D: +RM9m), respectively whilst foreigners emerged as major net buyers with total purchases valued at RM153m (5D: +RM49m).

TECHNICAL OUTLOOK: KLCI

Following the successful breakout above 1534 and the downtrend line resistance, we reckon the benchmark could advance further towards 1556-1564-1580 zones before profit taking activities emerge. On the flip, a sharp fall below 1534 and 1511 (30D SMA) could signal a resumption of consolidation ahead with key supports pegged at 1500-1483-1474 zones.

MARKET OUTLOOK

On the back of easing political risk and investors’ confidence in policy continuity coupled with the reopening of more economic sectors amid promising progress in vaccinations will augur well for the economy and corporate sectors. Hence, we feel the market’s risk to reward is now tilted to the upside with short term resistances pegged at 1556-1564-1580 (supports: 1500-1515-1534), pending the announcement of DPM and cabinet team, as well as the Jackson Hole symposium for clues of the potential US tapering.

Source: Hong Leong Investment Bank Research - 25 Aug 2021