MARKET REVIEW

Global. Asian markets staged a mild technical rebound following the recent slide, boosted by strong Apple earnings but volatility prevailed as investors digested the hawkish Fed policy and a buoyant US 4Q21 GDP data. Taking cues from bargain hunting activities in Apple on strong earnings and other mega technology stocks (e.g. Microsoft, Amazon, Meta and Alphabet), the Dow rallied 1.65% to 34725 (-6% from an all-time high of 36952) whilst the Nasdaq 100 surged 3.22% to 14454 (-15% from an all-time high of 16212). WoW, the Dow rebounded 1.34% while the Nasdaq 100 eased 0.11%, ending a tumultuous week marked by mixed corporate earnings, geopolitical turmoil and an increasingly aggressive Fed.

Malaysia. Contrary to the Asian and Wall St losses, KLCI rose 4 pts to record its 3rd consecutive gain to 1520 (-7 pts WoW) amid bargain-hunting activities on selected heavyweights such as AXIATA, DIGI, TOPGLOV, SIMEPLNT, CIMB and PBBANK. Market breadth turned positive with gainers beat losers by 492 to 361 whilst total turnover dropped 10% to 2.20bn shares valued at RM1.54bn. After net selling RM332m in the last seven straight sessions, local institutional funds turned net buyers with RM110m (5D: -RM86m) in equities whilst local retailers (-RM11m; 5D: -RM31m) and foreign investors (-RM99m; 5D: +RM116m) were the major net sellers.

TECHNICAL OUTLOOK: KLCI

Following a steeply oversold position after tumbling 67 pts from 1570 to 1503, KLCI managed to recoup some losses to end higher for the 3rd straight day to 1520, above the key 1515 neckline support. We expect volatility to prevail with a crucial support at 1500 zones. If a decisive breakdown below 1500 arises, the next support is anticipated at 52- week low at 1475. On the upside, a strong breakout above 1522-1533 hurdles may lift the index to revisit 200D MA at 1548 and 1570 zones.

MARKET OUTLOOK

Tracking the relief rally in Wall St last Friday and bottoming up indicators, KLCI may inch up further in this holiday-shortened week (half-day trading: 31 Jan; CNY holidays: 1-2 Feb;) but the rebound could be capped near 1533-1548 levels (key supports: 1475-1500) as the market is trying to price in the hawkish Fed, lingering Russia-Ukraine conflict, the Omicron wave in Malaysia, the upcoming Feb reporting season and Johor snap polls.

Source: Hong Leong Investment Bank Research - 31 Jan 2022