MARKET REVIEW

Global. In line with a 1.3% slide in Nasdaq 100 overnight, Asian bourses ended mostly lower amid falling technology shares as investors are navigating headwinds from the omicron variant, supply-chain disruptions and more central banks winding back pandemic stimulus. Sentiment was dampened by the penalties on Alibaba, Bilibili and Tencent for improper reporting of deals, and draft rules affecting mobile apps, including a security review requirement for those with functions that could sway public opinion. Overnight, Wall St plunged (Dow:-1.07% to 36407; S&P 500: -1.94% to 4700; Nasdaq 100: -3.12% to 15771) amid a more hawkish than expected Dec Fed minutes. Policymakers agreed to hasten the end of their pandemic-era program of bond purchases and issued forecasts anticipating three 0.25% hikes during 2022. Meanwhile, the benchmark US 10Y yield rose to its strongest level since Apr 2021, climbing 0.03% to 1.70%.

Malaysia. Bucking lower regional markets, KLCI staged a 6-pt technical rebound to end at 1548, led by beaten-down healthcare and banking heavyweights. Market breadth stayed positive with gainers leading losers 659 to 346 while retail bargain hunting lifted small-cap stocks higher on improving trading momentum. Turnover and value rose 28% and 1.6% to 4.50bn shares worth RM1.96bn, respectively.

TECHNICAL OUTLOOK: KLCI

After a 2-day slide of 25.6pts, KLCI finally staged a 6-pt rebound to end at 1548. We reiterate that the index may continue to find its footing in the coming days with major supports situated at 1520-1528 levels to digest the recent gains. On the upside, any residual strength is likely to experience stiff hurdles at 1554-1567-1580 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 elevated FCPO and oil prices. However, we see increased volatility amid the hawkish Fed, re-introduction of IDSS and PDT short sale, the emergence of new Covid-19 variants such as ‘IHU’ and Omicron, fluid domestic politics and the impact on sector/corporates after widespread flooding in many states in Peninsular Malaysia. Key supports are pegged at 1500-1520-1528 whilst stiff resistances are situated at 1580-1600-1613 levels.

Source: Hong Leong Investment Bank Research - 6 Jan 2022