MARKET REVIEW

Global. Tracking Wall St negative performance overnight, the MSCI Asia ex-Japan index fell 3.4 pts to 621.4 as markets grappled with the economic risks from the Omicron strain and the implications of reduced central banks’ support to curb elevated inflation. The Dow reversed earlier 155-pt losses to end +383 pts or +1.1% at 35927, as the market breathed a sigh of relief and cheered the Fed with a vote of confidence after Powell struck an upbeat tone about the US economic recovery and expressed willingness to end its pandemic -era bond purchases in Mar and begin raising interest rates as much as three times in 2022 to control elevated inflation.

Malaysia. After hitting a fresh 52-week low at 1475.4 intraday, KLCI staged an eleventh hour rebound to end +1.9 pts to 1482.8, led by bargain hunting activities on selected heavyweights such as TOPGLOV, HARTA, PETGAS, TENAGA, MISC and CIMB. However, market breadth remained negative with 442 losers outnumbered 418 gainers, while turnover was 2.82bn shares valued at RM1.74bn (the 3rd lowest YTD).

TECHNICAL OUTLOOK: KLCI

After plunging 138 pts to a fresh 52-week low at 1475 intraday, KLCI staged a mild rebound to finish +1.9 pts at 1482.8 yesterday. In the wake of the present sluggish technical momentum and weak trading velocity, an extended consolidation to test the crucial 2Y low near 1452 zones is likely before witnessing a meaningful recovery. If the bulls can manage to hold off the current onslaught, then a bounce back up to 1492-1500-1515 may be next on the cards. On the flipside, failure to defend the 1452 support may witness further rout towards 1400-1430 levels.

MARKET OUTLOOK

Volatility will prevail throughout this week’s as markets weigh Fed’s hawkish tilt policy, Omicron variant uncertainty, persistent foreigners’ liquidations (-RM1.04bn in the last ten consecutive days), as well as the “market unfriendly” taxes in Budget 2022. Nevertheless, the benchmark may probably regain its footing in the coming days (supports: 1430-1452; resistances: 1490-1500-1515) in anticipation of a steeply oversold relief rally ahead of potential year-end window-dressing activities.

Source: Hong Leong Investment Bank Research - 16 Dec 2021