MARKET REVIEW

Global. Tracking a bullish Wall St performance overnight, the MSCI Asia ex-Japan index rose 3.2 pts to 624 as investors welcomed the latest decision by the Fed to double the pace of asset tapering despite high inflation and Omicron threat amid upbeat tone about the US economic recovery. Wall St struggled to maintain direction a day after the Fed sped up the pace of tapering and rates lift-off expectations. The Dow eased 30 pts (intraday: - 149 pts) to 35897 whilst the Nasdaq 100 stumbled 2.6% to 15864, led by a massive selloff in mega-cap tech stocks such as Nvidia, Apple, Microsoft, Amazon an d Tesla, as Fed’s hawkish tilt statement appeared to push investors away from high-growth tech leadership rotation toward more economically sensitive and value sectors.

Malaysia. Mirroring higher regional markets and ahead of potential year-end window dressing activities, KLCI rose for the 2nd straight day (+1.83 pts to 1484.64), led by bargain hunting activities on selected heavyweights such as MISC, CIMB, HLBANK, IHH, PCHEM and PBBANK. After falling below 1, market breadth turned positive 54 gainers vs 361 losers, while turnover was 2.83bn shares valued at RM2.35bn.

TECHNICAL OUTLOOK: KLCI

After plunging 138 pts to a fresh 13M low at 1475 on 15 Dec, KLCI staged a mild rebound for a 2nd consecutive day. If the bulls can manage to hold off the current onslaught, then a bounce back up to 1491-1500-1515 may be next on the cards. On the flipside, failure to push above 1515 would indicate that the short term weakness remains intact, with immediate support at 1475 followed by 1452 (2 Nov 2020).

MARKET OUTLOOK

Volatility will prevail throughout this week’s as investors assess Fed’s hawkish tilt policy, Omicron variant uncertainty, persistent foreigners’ liquidations (-RM1.1bn in Dec after net inflows of RM3.6bn from Aug-Nov), 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 - 17 Dec 2021