MARKET REVIEW

Global. Tracking overnight Nasdaq's 2.6% slump, Asian bourses ended mostly in the red as investors wrestled with spiralling numbers of Omicron cases and a hawkish shift from major central banks in fight against surging inflation. Sentiment was dampened by Biden’s administration addition of 34 China companies’ under its banned-entity list. Last Friday, the Dow slid 532 pts or 1.48% to 35365, as selling intensified into the close amid a rout in financials and energy shares amid lingering worries about a more hawkish shift in global monetary policy and the highly contagious Omicron variant could lead to a perfect storm to the US healthcare system and decelerate economic growth.

Malaysia. Bucking regional trend, KLCI surged 17.37 pts to close at 1502.01 intraday high to record its 3rd straight winning streak, led by last-minute buying on selected heavyweights such as PETGAS, KLK, TENAGA, HARTA, PCHEM, and HAPSENG. Despite the benchmark gains, market breadth turned negative with losers (434) outpacing gainers (425), while turnover remains flat at 2.81bn shares valued at RM2.73bn.

TECHNICAL OUTLOOK: KLCI

After sliding 110 pts in the last 8 consecutive weeks, KLCI finally registered its 3rd consecutive gain to end +17.4 pts at 1502 last Friday (+13 pts WoW). If KLCI is able to sustain last Friday’s gains and strongly break above mid BB near 1503 levels, higher hurdles at 1515-1520-1536 may be next on the cards. On the flip side, failure to hold up at 1500 psychological levels would indicate that KLCI may revisit 1452-1475 support levels.

MARKET OUTLOOK

In the anticipation of window dressing activities together with bottoming up technical oscillators, we see further advance in KLCI for the remaining 10 trading days. That said, as investors continue to assess Fed’s hawkish tilt policy, Omicron variant uncertainty, persist foreigners’ liquidations (-RM1.12bn in Dec after net inflows of RM3.6bn from Aug-Nov), as well as the “market unfriendly” taxes in Budget 2022, KLCI may face some stiff hurdles at 1515-1536 levels.

Source: Hong Leong Investment Bank Research - 20 Dec 2021