MARKET REVIEW

Global. From a low of 622 (20 Aug), the MSCI Asia ex-Japan rallied 5% to a high of 652.9 (25 Aug) before falling 3.9 pts to 647.5 as investors weighed China’s crackdown on private industries whilst awaiting Powell's speech at the Jackson Hole symposium for clues over any tapering of stimulus measures. After 5 consecutive gains, the Dow slipped 192 pts to 35213 after hawkish commentary from two Fed officials James Bullard and Robert Kaplan called for the Fed to start ending its bond-buying program to avoid risking more aggressive moves to curb inflation. Fed President Powell is due to speak at the Jackson Hole symposium tonight.

Malaysia. KLCI jumped 15.9 pts to 1585.7 (5th consecutive gain), lifted by banking, O&G and plantation stocks amid sustained foreign buying interests, on signs of an improving domestic political landscape and economic reopening optimism. In terms of fund flows, foreigners continued their strong net purchases for the 4th straight day amounting to RM707m (5D: RM685m) whilst the local institutions and retailers continued log net selling activities amounting to RM290m (5D: -RM556m) and RM20m (5D: -RM128m), respectively.

TECHNICAL OUTLOOK: KLCI

Following the successful breakouts above the LT downtrend line near 1557 and the 200D SMA (near 1581), we reckon the benchmark could advance further towards 1600-1615 zones before profit taking activities emerge, as technical indicators are getting overbought. Any weakness may see the index find support at 1550-1565 zones.

MARKET OUTLOOK

Driven by foreign funds buying in anticipation of easing political risk and confidence in policy continuity, the reopening of more economic sectors amid promising progress in vaccinations, coupled with the further extension on Intraday Short Selling (IDSS) and intraday short selling by Proprietary Day Traders (PDT Short Sale) to 31 Dec 21, KLCI may continue to advance further but the upside is likely to be capped near 1600-1615 territory (supports: 1550-1565) after recent surge from Aug low at 1483. Key events that may dictate further the KLCI direction are the impending announcement of DPM and cabinet team, as well as the Jackson Hole symposium for clues of the potential US tapering and timing of interest rates hikes.

Source: Hong Leong Investment Bank Research - 27 Aug 2021