MARKET REVIEW

Global. Asian markets ended mixed as investors continued to weigh on China’s promising Aug data with US sluggish Aug jobs report, as well as the upcoming FOMC meeting (21-22 Sep) on tapering timeline. Overnight, the Dow ended -69pts to 35031 amid rising risk aversion over a slowdown in the recovery from the renewed surge of Covid-19 Delta variant cases and hawkish comment from St Louis Fed President James Bullard that the Fed should trim its massive stimulus program despite a tepid Aug jobs data. Key events to monitor this week are the Fed officials speeches (Thursday) and PPI data on Friday.

Malaysia. KLCI closed 14.1pts higher to end at 1597.6 yesterday, lifted by last-minute buying in selected heavyweights in anticipation of the migration of Klang Valley economic hub (contributed over 40% to Malaysia GDP) into Phase Two of NRP from 10 Sep. However, market breadth turned negative as 707 losers led 374 winners, with a total of 5.9bn shares worth RM3.2bn were traded amid strong selling pressure from 2nd and lower liners. In terms of fund flows, foreigners’ buying momentum continued for the 12th straight day with increased magnitude to RM207m whilst retail investors remained net buyer for a 6th consecutive session amounting to RM36m. On the other hand, local institutions’ selling spree continued for the 11th consecutive session amounting to –RM243m.

TECHNICAL OUTLOOK: KLCI

KLCI closed 14.1pts higher to end at 1597.6 yesterday, above the key 200D SMA (1583). The bullish candle is likely to push the benchmark to retest immediate resistance of 1605. Only a strong breakout of 1605 level will spur greater upside towards 1623 levels. Key retracement supports are pegged at 1550-1564-1583 zones.

MARKET OUTLOOK

Despite intermittent profit taking 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, economic reopening gaining tractions, coupled with sustained influx of foreign funds (+RM1.7bn since end July). With local institutional funds still remain net sellers (-RM2.2bn since end July), further external inflows could see KLCI rerate higher if local institutions 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 - 9 Sept 2021