MARKET REVIEW

Global. Tracking a rebound from Wall St overnight, Asian bourses ended mostly higher, led by HSI (+2.8%), NIKKEI 225 (+1.9%) and SHCOMP (+0.8%) following Powell’s less hawkish-than-expected testimony to the Senate and lower-than-expected China’s inflation data. Wall St ended modestly higher (Dow: +38 pts to 36290; Nasdaq: +35 pts to 15188) in a choppy session after the red-hot 40Y high Dec CPI data of 7% was largely matched expectations and suggested the Fed may not have to hike interest rates too aggressively.

Malaysia. Bucking overnight rally from Wall St, KLCI fell as much as 8.6 pts to 1555.7 after climbing 31.7 pts in three days, led by profit taking in financial stocks. However, bargain hunting on selected heavyweights like PCHEM, DIALOG, PBBANK, PMETAL and PPB narrowed the losses to 1.1 pts to 1563.2. Despite the headline loss, market breadth stayed positive as 569 gainers outnumbered 389 losers with turnover falling 18% to 3.37bn shares valued at RM1.91bn.

TECHNICAL OUTLOOK: KLCI

After jumping 31.7 pts in three days, KLCI fell as much as 8.6 pts to 1555.7 before narrowing the losses to 1.1 pts at 1563.2. As long as the index is trading above the major support trendline (from 1475) near 1542, we expect KLCI to re-challenge 1567 (31 Dec high), followed by 1580 (76.4% FR) levels before heading towards the formidable 1600 psychological barrier. On the flipside, a decisive fall below 1542 may trigger renewed selling spree towards 1500-1518-1528 levels.

MARKET OUTLOOK

As long as the KLCI can stay above the support trendline near 1542, the index could still retest 1567-1580-1600 hurdles amid aggressive economic reopening activities, high vaccination rates, and elevated FCPO and oil prices. Nevertheless, our mantra of continued market volatility prevails as the positives are partly offset by the Covid-19 virus’ mutation and surging global infections, hawkish Fed, slowing China’s economy, domestic policy and regulatory risks, the return of intraday short selling, and political fluidity.

Source: Hong Leong Investment Bank Research - 13 Jan 2022