MARKET REVIEW

Global. After the kneejerk selloff on Thursday, Asian markets ended mixed ahead of the key US Dec jobs data as investors continued to digest a more hawkish tone from the latest Dec FOMC meeting minutes and renewed Covid-19 restrictions stalling reopening economies in the face of highly transmissible Omicron variant. Last Friday, the Dow lost 5 pts (from -125 pts intraday) to 36232 whilst the Nasdaq 100 plunged 173 pts to 15592 as investors weighed the latest payrolls report and surging 10Y US bond yield (+0.04% to 1.76%). Despite creating lower jobs of 199k (consensus 400k), average hourly earnings increased by 0.6% (consensus 0.4%) whilst the unemployment rate fell near to 2Y low at 3.9% (consensus 4.1%), reinforcing the view that Fed may accelerate its timeline for rate hikes and witnessing a further shift in market leadership amid rotation out from technology heavy growth shares and into more value-oriented sectors.

Malaysia. After sliding 34.1 pts in the last four trading sessions, KLCI staged a 9.75 -pt technical rebound at 1543.1 amid bargain hunting on selected heavyweight stocks in glove, plantation, telco and banking sectors. Market breadth turned positive with gainers thumped losers by 600 to 338 with turnover jumped 44.8% to 4.14bn shares worth RM1.90bn as investors’ focus remained on lower liners and ACE stocks.

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. We hold the view that the benchmark may trend sideways in the coming days with major supports hovered at 1500-1520-1528 levels after retracing below the 1552 (200D MA) levels. On the upside, a successful breakout above 1552 may lift the residual strength towards 1567-1580-1600 hurdles.

MARKET OUTLOOK

KLCI may continue to trade range bound in 1Q22 (supports: 1450-1470-1500; resistances: 1567-1580-1600), as 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, the positives are partly offset by the concerns over Omicron, return of intraday short selling, one-off cukai makmur, flooding risks and political fluidity.

Source: Hong Leong Investment Bank Research - 10 Jan 2022