MARKET REVIEW

Global. Tracking bearish overnight Wall St, Asian markets declined as investors grappled with 40-year high US Jan CPI and hawkish comment from James Bullard (a voting member in 2022’s rate-setting committee), fuelling bets for a more aggressive rate hikes jitters and balance sheet wind down. Wall St plunged (Dow: -1.4% to 34738; Nasdaq 100: - 3.1% to 13791) last Friday as investors weighed the multi-decades high inflation as well as heightened tensions between Russia and Ukraine following the White House’s warning that Russia could invade Ukraine at any time. Safe havens such as US 10Y yield (-0.09% to 1.94%) retreated from the 2018 highs while gold (+1.3% to 1860) and Brent oil prices (+4% to USD95.1) rallied.

Malaysia. Shrugging off the overnight slump from Wall St and surging local Covid-19 cases, KLCI scored its 3rd straight gain (+8.8 pts to 1578.9) last Friday, underpinned by the return of foreign inflows, positive 4Q21 GDP release and the National Recovery Council’s (NRC) proposal to fully reopen Malaysia’s international borders as early as March. After posting net monthly inflows of RM332m in January (Dec 2021: -RM1.11b), foreign investors turned net buyers last week with net inflows of RM749m (Feb MTD: +RM720m). This was matched by net selling trades from domestic institutions (Feb MTD: -RM636) and retailers (Feb MTD: -RM84) amounting to -RM649m and -RM100m, respectively.

TECHNICAL OUTLOOK: KLCI

Despite a lacklustre opening last week, KLCI surged 48.8-pt from Wednesday-Friday to close at YTD high of 1578.9 (+56.1 pts WoW). In the wake of the bullish breakouts and indicators, KLCI could trend higher towards the formidable 1600-1613 hurdles in the short term but do expect profit-taking activities to take place after rallying from YTD low at 1503, coupled with the bearish Wall St performance last week. Conversely, falling back below 1546-1560 may trigger further pullback towards next supports at 1515-1528 levels.

MARKET OUTLOOK

In the wake of the technical bullish breakouts and indicators, KLCI could trend higher towards the formidable 1600-1613 hurdles. However, profit taking activities could emerge (after rallying from 1503 YTD low) in light of multiple headwinds ahead amid red-hot US CPI data, increasingly hawkish Fed, the unfolding of Omicron waves in Malaysia and escalating Ukraine crisis. On the flip side, any pullback is likely to be cushioned near 1528- 1546-1560 levels, 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 FOCUSP (+15.9%) and 3A (+10.6%).

Source: Hong Leong Investment Bank Research - 14 Feb 2022