MARKET REVIEW

Global. Despite Dow’s relief rally, Asian markets ended lower last Friday amid lingering concerns about the impact of China Evergrande debt crisis with regards to the USD83.5m dollar-bond interest payments due last Thursday and another USD47.5m due on 29 Sep. Sentiment was also dampened by Beijing’s latest ban on all digital currency activities. The Dow fluctuated within 34648-34857 levels before ending +33 pts at 34798 (+214 pts WoW). Investors shrugged off an impending Fed’s pullback in stimulus, potential contagion risks from Evergrande and Beijing’s latest crackdown on crypto-currencies.

Malaysia. Tracking cautious regional markets, KLCI slipped 7.3 pts to 1532, led by selldown in TENAGA, CIMB, MAYBANK, HARTA and PMETAL amid nagging worries of government’s proposals to boost its coffers with capital gain tax and one-off higher tax rate for companies benefited under the Covid-19 environment. Meanwhile, foreigners resumed selling amounting to RM88m after recording three days of straight buying. Joining local retailers net buying amounting to RM37m, local institutions net bought RM51m, its 1st inflow after recording 21th straight days of net selling totalling RM3.05bn.

TECHNICAL OUTLOOK: KLCI

After plunging as much as 85 pts from 1605 to 1520 on 21 Sep, the benchmark staged a mild rebound to close at 1532 last Friday, slipping 16 pts WoW and recording its 4th consecutive weekly decline. The current rebound from the 1483 lows may continue this week ahead of the potential 3Q21 window dressing activities but we expect stiff hurdles ahead with 1544-1559-1568 zones in the short term. A successful breakout above these hurdles may lift the benchmark out of the sideways consolidation mode to revisit 1581-1605 territory. On the downside, key supports are situated at 1500-1510-1520 levels.

MARKET OUTLOOK

The rebound from the 1483 lows may continue this week ahead of the potential 3Q21 window dressing activities, positive hopes from the tablings of 12MP (27 Sep) and Budget 2022 (29 Oct), which are expected to paint a clearer picture of Malaysia’s short-to-medium term growth prospects and offer various investment opportunities to investors, as well as further re-opening of economic sectors as the nation is entering endemic phase by year end. Nevertheless, we expect stiff hurdles at 1544-1559-1568 zones in the short term pending more clarity on Evergrande’s bond interest payment schedule and the government’s proposals to boost its coffers with capital gain tax and windfall tax.

Source: Hong Leong Investment Bank Research - 27 Sept 2021