MARKET REVIEW

Global. Asian markets ended higher as a disappointing US Aug jobs data fuelled expectation that the Fed could push back the timeline for tapering stimulus measures whilst plans for a new stock exchange in Beijing and a slew of market-friendly rhetoric from government officials also boosted sentiment. Overnight, Wall St was closed for Labour Day holiday. At the point of writing, the Dow Jones inches up 48pts to 35417 as investors continue assess whether the Fed will err on the side of caution on its tapering timeline during 22 Sep FOMC meeting to avoid acting prematurely. Key events this week are the Fed officials speeches (on Wed & Thursday) and PPI data on Friday.

Malaysia. After surging from a low of 1483 (4 Aug) to a 5M high of 1605 (1 Sep), KLCI continued its long-awaited profit taking pullback to end -7.6 pts at 1581.6 yesterday, weighed down by O&G, plantation and banking stocks. Despite the KLCI’s loss, market breadth stayed positive as 624 gainers outnumbered 476 losers, with a total of 4.4bn shares worth RM2.9bn were traded amid increasing trading interests on 2nd and lower liners whilst blue chips consolidate. In terms of fund flows, foreigners’ buying momentum continued for the 10th straight day amounting to RM72m while the retailers turned net buyers for a 4th day amounting to RM11m. On the other hand, local institutions’ net selling pace extended for a 9th consecutive session amounting to RM83m.

TECHNICAL OUTLOOK: KLCI

After surging about 100 pts in the last 4 weeks, KLCI fell 7.6 pts to 1581.6 yesterday, a tad below the key 200D SMA at 1583. Following the 23-pt pullback from recent high of 1605 and moderating technical readings, the benchmark is likely to engage in sideways consolidation for this week to neutralise the overbought positions. Topside, stiff resistances are situated at 1605-1623 levels whilst downside supports are pegged at 1550-1564 zones.

MARKET OUTLOOK

Despite short term consolidation after rallying from 1483 (YTD low), overall sentiment is expected to hold up amid hopes of easing political risks and confidence in policy continuity, smooth progress with Covid-19 vaccinations and the number of new Covid-19 infections especially in the major Klang Valley economic hub (contributed over 40% to Malaysia GDP) has likely peaked, coupled with sustained influx of foreign funds (+RM1.4bn since end July). With local institutional funds still remain net sellers (-RM1.8bn since end July), further external inflows could see KLCI rerate higher if locals funds are forced to play catch up. Major supports are pegged at 1550-1564 whilst resistances are near 1605-1623 levels.

Source: Hong Leong Investment Bank Research - 7 Sept 2021