MARKET REVIEW

Global. Bucking overnight slump in Wall St, the MSCI Asia Pac index gained 1.43 pts to 187.87, led by HSI (+3.2%), KOSPI (+1.6%) and NIKKEI 225 (+0.7%) as investors’ nerves were calmed by blowout earnings from several US technology stocks, including Amazon, Snap and Pinterest. Last Friday, the Dow pared losses from -312 pts to end -21 pts at 35089 whilst the Nasdaq 100 rallied 1.3% to 14694 as strong tech stocks’ earnings overshadowed lingering concerns over Covid-19 cases, geopolitical tensions in Ukraine and a hawkish Fed. Meanwhile, US Treasury yields rose 0.09% to 1.92% as investors reacted to a surprisingly strong Jan jobs report (+467k vs consensus +150k), strengthening the case for aggressive monetary policy tightening and balance sheet reduction.

Malaysia. After soaring 13.5 pts on Thursday, Bursa Malaysia eased 3 pts at 1522.8 during the holiday-shortened week last Friday, led by declines in heavyweights including IOICORP, MAYBANK, TENAGA, MRDIY, IHH and SIMEPLT. Market breadth was positive with gainers thumped losers by 553 to 324 whilst total turnover rose 18.5% to 2.43bn shares valued at RM1.65bn.

TECHNICAL OUTLOOK: KLCI

After recovering from a low of 1503 (25 Jan) to a high of 1526, KLCI dropped 3 pts to 1522.8 last Friday (+2.8 pts WoW). In the short term, the index may continue to lock in a range bound consolidation mode between 1500-1533-1547 levels. Only a strong breakout above 1547 (200D MA) hurdle will strengthen more rally towards the formidable barriers at 1570-1600 territory. Immediate supports are pegged at 1500-1515 levels.

MARKET OUTLOOK

Tracking the resumption of wild swings in Wall St as the global economy now appears to be progressing toward late-cycle dynamics (IMF global GDP forecasts: 2021:+5.9%, 2022:+4.4%, 2023:+3.8%), given that monetary policy in most regions has shifted course toward normalization, persistently elevated inflation, Covid-19 variants, and geopolitical tensions in Ukraine. Similarly, KLCI’s rebound from a 52-week low of 1475 (15 Dec) could also encounter sticky hurdles at 1547 (200D MA) to 1570, clouded by the unfolding of Omicron waves in Malaysia, upcoming Feb reporting season and Johor snap elections. Weekly supports are situated at 1500-1515 whilst resistances are pegged at 1533-1547 levels.

Source: Hong Leong Investment Bank Research - 7 Feb 2022