MARKET REVIEW

Global. Asian markets ended mixed with investors digesting soaring US Treasury yields and surging oil prices that could trigger further inflationary concerns. The Dow plunged 569 pts or 1.63% to 34230 whilst the Nasdaq slid 423 pts or 2.83% to 14547 pts in a broad sell off driven by surging US Treasury yields (+0.05% to 1.54%) as the risk of inflation proving less transitory than expected, and a contentious debt ceiling negotiations in Washington to avoid government shutdown and potential US debt default. The sentiment was also hit by unexpected weakness in Sep consumer confidence, the lowest level since Feb.

Malaysia. KLCI rallied 13.8 pts to 1546.8, led by buying interests in O&G, banks, metals and glove stocks as investors reacted positively to the 12MP and potential 3Q21 window dressing activities. Despite the headline gains, market breadth remained negative for a 3rd day as the losers edged the gainers by 593-to-463 stocks. In terms of fund flows, foreigners and retailers remained the major net buyers amounting to RM73m and RM4m, respectively. Local institutions continued to be the largest net sellers amounting to RM77m.

TECHNICAL OUTLOOK: KLCI

After closing below the 50D SMA in the last six days, the benchmark has finally broken above this hurdle successfully to end at 1546.8 yesterday, supported by bottoming up indicators. The positive momentum may drive the index higher to retest 1558 -1576 barriers. A successful breakout above these hurdles may lift the benchmark out of the sideways consolidation mode to revisit 1580-1605 territory. On the downside, key supports are situated at 1500-1510-1520 levels.

MARKET OUTLOOK

Despite anticipating a negative spillover from Wall St slide overnight, the fall is likely to be cushioned (supports: 1500-1520; resistances: 1558-1576) by potential 3Q21 window dressing activities, a LT positive 12MP (but we are cognisant of execution risk) coupled with further re-opening of economic sectors given the improvement in the local pandemic situation.

VIRTUAL PORTFOLIO POSITION-FIG1

We took the opportunity from a strong rebound yesterday to trim our virtual portfolio positions in DRBHCOM (2.4% loss; expiry), DIALOG (4.7% gain; hit R1) and HIBISCS (5.3% gain, hit R1).

Source: Hong Leong Investment Bank Research - 29 Sept 2021