MARKET REVIEW

Global. Asian markets ended mixed as investors digested lingering Covid-19 fears after WHO warned that omicron cases are “off the charts”, coupled with a red-hot inflation report that set market expectations for more aggressive rate hikes as early as March. Despite slowing growth of 0.2% (consensus +0.4%) in Dec PPI, Wall St tumbled (Dow:-0.5% to 36113; S&P500: -1.4% to 4659; Nasdaq 100: -2.6% to 15496) amid a resumption in tech rout after Fed Governor Dr Lael Brainard (nominated as Vice-Chair of the Board) signalled that rates will rise in March to fight inflation, saying that the Fed "has projected several rate hikes over the course of the year".

Malaysia. After fluctuating between 1560.29 and 1570.14, KLCI ended +6.3 pts at 1569.5, boosted by last 30-minute buying interests in PCHEM, MAYBANK, PMETAL, RHBBANK, HLBANK and PETGAS. Despite the headline gains, market breadth was negative as 642 losers overwhelmed 343 gainers with turnover inched up 2.7% to 3.46bn shares valued at RM2.14bn.

TECHNICAL OUTLOOK: KLCI

Barring a breakdown below uptrend line support near 1545, KLCI may continue its upward momentum towards 1580-1600 levels after crossing above 100D/200D SMAs convincingly. On the flipside, a decisive fall below 1545 may trigger renewed selling spree towards 1500- 1520 levels.

MARKET OUTLOOK

As long as the KLCI is able to stay above the support trendline near 1545, the index could still retest 1580-1600 hurdles in anticipation of a strong 2022 GDP growth of 5.5% amid aggressive economic reopening activities on easing of lockdown measures, pent-up demand and high vaccination rates, coupled with 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 - 14 Jan 2022