MARKET REVIEW

Global. Led by routs in NIKKEI 225 (2.9%), ASX 200 (2.7%) and KOSPI (1.1%), Asian markets were in a sea of red following bearish Wall St close overnight and surging US 10Y bond yield amid the hawkish FOMC Dec 2021 minutes. Ahead of the start of 4Q21 results season next week, the Dow closed near session low (-170 pts at 36236) whilst the S&P 500 (-5pts to 4696) and Nasdaq 100 (-6 pts to 15765) moved off session lows, underpinned by dip-buying in tech, O&G and financials stocks as investors weighed the recent hawkish Fed policy minutes, sluggish Dec ISM services data and rising weekly jobless claims.

Malaysia. Tracking US and regional markets’ selloff, KLCI plunged 14.5-pts to close at 1533 with intensified selling pressure across the board (KLCI components: 2 gains vs 28 declines). Market breadth turned negative with losers outpaced gainers by 618 to 320 with turnover and value decrease 36% and 3% at 2.86bn shares worth RM1.90bn, respectively.

TECHNICAL OUTLOOK: KLCI

After hitting a high of 1567 on 31 Dec 2021, profit-taking activities continue to weigh heavily on KLCI, plunging 34 pts in the last 4 trading days. After falling below the 1540 short-term support, we hold the view that the benchmark may trend sideways in the coming days with major supports hovered at 1500-1520-1528 levels. On the upside, any residual strength is likely to experience stiff barriers near 1540-1567-1580 levels.

MARKET OUTLOOK

The domestic recovery scenario will continue to unfold into 2022, as economic imbalances wrought by the pandemic begin to ease whilst the business cycle normalizes and economic reopening activities gather steam, underpinned by Malaysia’s high vaccination rates, elevated FCPO and oil prices, improvements in private consumption, investment and continued expansion in trade activities. Nevertheless, we see increased volatility amid the hawkish Fed, re-introduction of IDSS and PDT short sale, the fluidity of the virus’ evolution and domestic politics, as well as 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 - 7 Jan 2022