MARKET REVIEW

Global. Asian markets nudged higher, guided by supportive Fed policy and recent weak economic data from China raises policy easing hopes, with consumer staples, real estate, financials and infrastructure sectors leading the gains. Ahead of the widely watched Aug nonfarm payrolls report on Friday, the Dow eased 0.1% to 35312 following a weak August private payrolls data and ISM’s survey highlighted persistent supply chain disruptions caused by the latest Covid-19 wave. Meanwhile, the Nasdaq gained 0.3% to a fresh new high at 15309, underpinned by renewed buying of megacap tech stocks in anticipation of Fed’s dovish monetary policy to continue.

Malaysia. After surging 86 pts in 7 days, KLCI finally succumbed to a long awaited profit taking pullback (-14.5 pts to 1586.9), weighed down by the banking, telcos, utility and healthcare-linked counters. In terms of fund flows, foreigners continued their strong net purchases for the 7th straight day amounting to RM116m (5D: RM1.43bn) while the retailers turned net buyers amounting to RM5m (5D: -RM108) after disposing RM187m in the last six days. On the other hand, local institutions net selling pace reduced to RM121m (5D: - RM1.32bn) after a heavy selloff of RM1.31bn in the last five days.

TECHNICAL OUTLOOK: KLCI

As anticipated, KLCI suffered a long-awaited profit taking pullback (-14.5 pts to 1586.9) on 1 Sep after surging 107 pts in Aug. KLCI is looking stretched at the moment and a healthy pullback may be overdue, reflected by the toppish RSI and stochastic indicators as well as the bearish engulfing pattern yesterday. Stiff resistances are situated at 1615-1623 levels whilst retracement supports are pegged at 1556-1564-1573 zones.

MARKET OUTLOOK

In spite of sustained buying interests by foreign funds in the last 7 days (~RM1.59bn) amid hopes of moderating political temperature and confidence in policy continuity, with Covid-19 vaccinations progressing well and the economy slated for full reopening by this November, KLCI is due for a healthy profit taking pullback after surging 107 pts in Aug. Stiff resistances are pegged at 1615-1623 territory whilst supports are situated near 1556-1564 levels.

Source: Hong Leong Investment Bank Research - 2 Sept 2021