MARKET REVIEW

Global. Asian markets ended mixed with investors digesting hawkish comments from some US Fed officials ahead of Powell’s speech at the Jackson Hole Symposium, and worries over rising geopolitical tension following the latest developments in Afghanistan. The Dow jumped 0.7% to 35455 whilst the S&P (+0.9% to 4509) and the Nasdaq (+1.2% to 15130) ended at record highs, as investors cheered Powell’s relatively dovish remarks at the Jackson Hole Symposium as he indicated that the central bank is likely to begin tapering by end 2021. However, he stressed that rate hikes aren’t imminent as there is still “much ground to cover” before the economy hits full employment.

Malaysia. Following the announcement of a new cabinet (largely within market expectation) last Friday, KLCI rose 4.4 pts to 1590.2 (6th consecutive gain), lifted by rotational plays on healthcare, O&G and banking stocks amid sustained foreign buying interests, in anticipation of easing political risk and confidence in policy continuity, the reopening of more economic sectors amid promising progress in vaccinations, coupled with further extension on IDSS and intraday short selling by proprietary day traders to end 2021. In terms of fund flows, foreigners continued their strong net purchases for the 5th straight day amounting to RM256m (5D: RM964m) whilst the local institutions and retailers remained their net selling activities amounting to RM240m (5D: -RM805m) and RM17m (5D: - RM159m), respectively.

TECHNICAL OUTLOOK: KLCI

Taking cues from the bullish Wall St close last Friday and KLCI successful breakouts above the multiple key SMAs, we reckon the benchmark could still nudge higher to test the 1600- 1615-1623 territory before a healthy pullback emerging, as technical indicators are becoming overbought. Any weakness may see the index find support at 1550-1565 zones.

MARKET OUTLOOK

On the back of Wall St bullish performance last Friday, sustained foreign buying interests by foreign funds, easing political temperature and confidence in policy continuity, as well as reopening of more economic sectors amid promising progress in vaccinations, KLCI may continue to advance further but the upside is likely to be capped near 1600-1615-1623 territory after a surge from Aug low at 1483. Key retracement supports are pegged at 1550- 1565 levels.

Source: Hong Leong Investment Bank Research - 30 Aug 2021