MARKET REVIEW

Global. Asian markets ended higher, led by China’s promising trade data and expectations that the U.S. Federal Reserve will push back tapering its bond purchases and keep its expansive policy for the near-term. Overnight, Dow Jones (-269pts to 35,100) and S&P500 (-15.4pts to 4,520) closed lower while the Nasdaq (+10.8pts to 15,374.3) edged up to a record high as investors balanced worries about the slowing pace of economic recovery with expectations that the Federal Reserve will maintain its accommodative monetary policy. 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 inched up 1.9pts to end at 1,583.4 yesterday, led by PMETAL and GENM but partially offset by profit-taking activities on financial stocks. 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 11th straight day amounting to RM135m while the retailers turned net buyers for a 5th day amounting to RM49m. On the other hand, local institutions’ net selling pace extended for a 10th consecutive Session Amounting to RM185m.

TECHNICAL OUTLOOK: KLCI

After spiking about 100 pts in the last 4 weeks, KLCI inched up 1.9 pts to 1583.4 yesterday, touching its key 200D SMA at 1583. Following the 22-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 well 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 - 8 Sept 2021