MARKET REVIEW

Global. Tracking overnight Wall St rally, Asian markets ended with a bang ahead of the US Jan inflation data tonight as US upbeat earnings results and hopes of defusing tension in Ukraine crisis after Macron held diplomatic talks with Putin overshadowed the worries about aggressive tightening monetary policy. Ahead of the crucial Jan inflation data, Nasdaq (+2.1% to 14490) led the broader markets higher (Dow: +0.9% to 35768; S&P: +1.45% to 4587). High growth tech and cyclical stocks were back to investors’ radar after recent selloff as the market seems to have found a more constructive tone in the tug of war between trepidation over the Fed and the better fundamentals in both earnings and the economic data.

Malaysia. In anticipation of a positive 4Q21 GDP release today and the National Recovery Council’s (NRC) proposal to fully reopen Malaysia’s international borders as early as March, KLCI surged 21.4 pts at 1551.5, shrugging off surging local Covid-19 cases amid the onslaught of Omicron variant. Market breadth turned positive with gainers outpacing losers by 579 to 412 whilst total turnover rose marginally to 2.95bn shares valued at RM2.51bn.

TECHNICAL OUTLOOK: KLCI

Following a decisive breakout above its critical 200D MA hurdle at 1547 levels, KLCI may advance further to retest 1570-1580-1600 territory from the current range-bound consolidation to retest 1570-1580-1600 zones on the back of bullish indicators. Immediate supports are now revised to 1515-1533-1547 levels.

MARKET OUTLOOK

Despite lingering headwinds such as hawkish Fed, elevated inflation, Feb reporting season, Johor snap elections (on 12 March) and the unfolding of Omicron waves in Malaysia, KLCI may trend higher amid overnight rally from Wall St and a bullish 200D MA breakout yesterday. Barring a breakdown below immediate 1533-1547 supports, KLCI may revisit its recent high of 1570-1580 next, supported by aggressive economic reopening activities, high vaccination rates, and elevated FCPO and crude oil prices.

VIRTUAL PORTFOLIO POSITION

After hitting our TP, we decided to square off HIAPTEK (+12.2%) yesterday.

Source: Hong Leong Investment Bank Research - 10 Feb 2022