MARKET REVIEW

Global. Asian markets ended mixed after last week’s kneejerk selloff as investors weighed the hawkish Fed tone and the renewed restrictions stalling reopening economies and surging Covid-19 hospitalizations amid highly contagious Omicron variant. The Dow clawed back from a 592-pt plunge to end -162 pts at 36069 whilst the Nasdaq inched up 7 pts after sliding as much as 406 pts, as investors snapped up beaten -down shares following recent rout in anticipation for a faster pace of Fed’s monetary policy tightening. Key events scheduled this week are the US inflation report (12 Jan), speeches from Powell and several other policymakers for more clues on the Fed's timing for a fed funds hike, and the upcoming 4Q21 results by Wells Fargo, Citigroup and JPMorgan (14 Jan).

Malaysia. After sliding 34.1 pts from 3-6 Jan, KLCI continued its technical rebound for a 2nd day (+7.1 pts to 1550.2) amid bargain hunting on selected heavyweight stocks such as CIMB, PMETAL TOPGLOV, HARTA, SIMEPLT and PBBANK. Despite the headline gains, overall market breadth stayed negative as losers 523 outnumbered 462 gainers with turnover growing 61% to 6.67bn shares valued at RM2.38bn due to increased interests on lower liners and ACE stocks.

TECHNICAL OUTLOOK: KLCI

After hitting a high of 1567 on 31 Dec 2021, profit-taking activities sent the index to a low of 1531 on 7 Jan before steadily recovering at 1550.2 pts yesterday. Barring a decisive breakout above the 1552 (200D MA) hurdle, we hold the view that the benchmark may trend sideways in the coming days with major supports hovered at 1520-1528-1545 levels. On the flip side, a strong close above 1552 may lift the residual strength towards 1567- 1580-1600 barriers.

MARKET OUTLOOK

The recovery scenario will continue to unfold into 2022 as business cycles normalize 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, volatility is likely (supports: 1450- 1470-1500; resistances: 1567-1580-1600) as the positives are partly offset by the multiple headwinds from Covid-19 virus’ future mutation and the ensuing response, wild swings in the equity and bond markets amid hawkish Fed, the return of intraday short selling, persistently high inflation, and political fluidity.

Source: Hong Leong Investment Bank Research - 11 Jan 2022