MARKET REVIEW

Global. On the 1st trading day of 2022, Asian markets ended mixed, with some major markets in the region (Australia, mainland China and Japan) were closed for holidays, as investors assessed the Omicron impact, central banks’ more hawkish stance and the suspension of Evergrande in the HKSE. Overnight, Wall St made a wishful start in 2022 (S&P 500: +0.64% at 4796, Dow: +0.68% to 36585; Nasdaq: +1.1% to 16501), lifted by banking, oil & gas and megacap tech stocks, in anticipation of sustainable US economic and corporate earnings growth despite the onslaught of Omicron variant (generally viewed as less severity against Delta strain).

Malaysia. KLCI made a sluggish 2022 debut as the index fell 18.5 pts to 1549.1 on profit taking after rallying 51 pts WoW. Trading sentiment was cautious as investors weighed on the re-introduction of IDSS and PDT short sale as well as the impact on sector/corporates after widespread flooding in many states in Peninsular Malaysia. Market breadth turned positive with gainers leading losers 485 to 436. Turnover rose to 2.74bn shares worth RM1.48bn compared with 2.52bn shares valued at RM1.86bn last Friday.

TECHNICAL OUTLOOK: KLCI

As expected, KLCI slid 18.5 pts to 1549.1 yesterday after rallying 51 pts WoW and 3.5% in Dec. We expect further sideways consolidation this week to neutralise the overbought momentum, with key supports at 1528-1545. After a brief consolidation, the benchmark may re-challenge 1580-1600-1613 barriers.

MARKET OUTLOOK

The recovery scenario will continue to unfold into 2022, as a new growth cycle emerges following Malaysia’s high vaccination rates and easing trend of daily Covid-19 cases. However, we expect volatility as investors assess the re-introduction of IDSS and PDT short sale, Omicron’s variant, fluid domestic politics and the impact on sector/corporates after widespread flooding in many states in Peninsular Malaysia. Key supports are pegged at 1528-1545 whilst stiff resistances are situated at 1580-1600-1613 levels.

Source: Hong Leong Investment Bank Research - 4 Jan 2022