MARKET REVIEW

Global. Asian markets ended mixed, weighed down by a set of tepid August official manufacturing and services PMI and regulatory tightening from China. After posted lifetime high in the 2H of Aug, the Dow eased 39 pts to 35360 on 31 Aug as sentiment was dampened by the weak China PMI reports and slower-than-expected Aug consumer confidence report from US amid heightened worries over Delta variant. Meanwhile, Brent oil slipped USD0.42 to USD73 as the OPEC+ geared up for a meeting today.

Malaysia. Tracking higher regional markets following a relatively dovish speech from Powell from the Jackson Hole meeting, KLCI jumped 11.2 pts to end at 1601.4 on 30 Aug (+107 pts in Aug). The positive sentiment was spurred by PM’s target to achieve a vaccination rate of over 50% of the adult population (by end Sep) in six states i.e. Perak, Terengganu, Johor, Kedah, Kelantan and Sabah, as well as considering moving the Klang Valley into Phase 2 of the National Recovery Plan. In terms of fund flows, foreigners continued their strong net purchases for the 6th straight day amounting to RM513m (5D: RM1471m) whilst the local institutions and retailers remained their net selling activities amounting to RM485m (5D: -RM1310m) and RM28m (5D: -RM161m), respectively.

TECHNICAL OUTLOOK: KLCI

Following a 7-day surge of 86 pts, KLCI is looking stretched at the moment and a healthy pullback may be overdue, reflected by the toppish RSI and stochastic indicators. Stiff resistances are situated at 1615-1623 levels whilst retracement supports are pegged at 1564-1582 zones.

MARKET OUTLOOK

In spite of a sustained buying interests by foreign funds in the last six days (~RM1.48bn) amid hopes of moderating political temperature and confidence in policy continuity, as well as reopening of more economic sectors, KLCI is ripe for a healthy profit taking pullback after surging 107 pts in Aug, reflected by the toppish RSI and stochastic indicators. Stiff resistances are pegged at 1615-1623 territory whilst supports are situated near 1564-1582 levels.

Source: Hong Leong Investment Bank Research - 1 Sept 2021