MARKET REVIEW

Global. Despite a 0.8% jump in SHCOMP after the PBOC slashed key policy rate to cushion a slowing economy, Asian markets ended mixed, as investors weighed the prospects of highly transmissible Omicron to the economy and more aggressive monetary policy by global central banks to tackle highly inflation. Wall St plunged overnight (Dow: - 1.5% to 35368; S&P500: -1.8% to 4577; Nasdaq: -2.6% to 14507) after back from Martin Luther King Jr. holiday on 17 Jan as surging US 10Y bond yields (+0.09% to 1.87%), on the back of the hawkish Fed and sluggish Goldman Sachs 4Q21 reports coupled with recent disappointing economic data (eg retail sales, consumer confidence, industrial production, and manufacturing) disrupted by the skyrocketing Omicron cases.

Malaysia. Ahead of the Thaipusam holiday, KLCI slipped 12.4 pts to 1542.9 on 17 Jan in line with lower Wall St and regional markets amid the hawkish Fed, led by selloff in plantation, O&G and telcos stocks. Market breadth was negative as 556 losers beat 337 gainers with turnover tumbled 28% to 2.59bn shares valued at RM2bn.

TECHNICAL OUTLOOK: KLCI

Following a back-to-back 26.6-pt slide, KLCI’s recent rebound from 1475 low appears to be stunted following amid a breakdown below 200D MA and support trendline again. Tracking overnight Wall St slump and weakening indicators, the benchmark may revisit key supports at 1511-1522-1533 levels whilst stiff barriers are situated at 1551-1570 levels.

MARKET OUTLOOK

Tracking overnight slide in Wall St and the KLCI breakdown below 200D MA and support trendline again, the benchmark is expected to have a rocky road ahead with key supports at 1511-1522-1533 levels (major resistances 1551-1570-1580). Our mantra of continued market volatility prevails as the positives (strong 2022 economic GDP growth of 5.5%, high vaccination rates, elevated FCPO and oil prices etc) 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 IDSS, and political fluidity.

Source: Hong Leong Investment Bank Research - 19 Jan 2022