MARKET REVIEW

Global. Tracking steep losses on Wall St overnight, Asian markets were in a sea of red as investors continued to grapple with the surging bond yields, Evergrande’s debt crisis, China’s worsening power crunch and mounting concern of a US debt-ceiling impasse ahead of the 30 Sep dateline. After a rout in the previous session, the Dow rebounded as much as 280pts before paring down the gains to 90 pts at 34390, weighed down by nagging fears about slowing US economy amid surging inflation and Fed’s plans to start tapering by end 2021, as well as a potential US government shutdown.

Malaysia. KLCI tumbled as much as 18.1 pts to 1528.7 before staging an eleventh-hour rebound to end +0.8-pt at 1547.7, underpinned by further reopening of economic sectors given the improvement in the local pandemic situation and news that Klang Valley will move to Phase 3 of NRP effective 1 Oct. However, market breadth remained negative for a 4th session as the losers edged the gainers by 580-to-398 stocks. In terms of fund flows, foreigners and retailers remained the major net buyers amounting to RM19m and RM26m, respectively. Local institutions continued to be the largest net sellers amounting to RM45m.

TECHNICAL OUTLOOK: KLCI

Despite external headwinds, KLCI staged a commendable rebound from -18.1 pts to end +0.8-pt at 1547.7. The positive hammer candlestick and a strong reclaim above 50D SMA (near 1536) may drive the index higher to retest 1558-1576 barriers in the short term, as technical indicators are on the mend. A successful breakout above these hurdles may lift the benchmark out of the sideways consolidation mode to revisit 1580-1605 territory. On the downside, a decisive fall below 50D SMA could pressure the index to revisit lower supports at 1500-1520 levels.

MARKET OUTLOOK

Despite lingering external headwinds, KLCI is expected to remain resilient with key supports situated at 1510-1520-1536 zones, in anticipation of a potential 3Q21 window-dressing activities, the LT positive 12MP coupled with further reopening of economic sectors given the improvement in the local pandemic situation and positive news that Klang Valley will move to Phase 3 of NRP effective 1 Oct.

Source: Hong Leong Investment Bank Research - 30 Sept 2021