MARKET REVIEW

Global. Asian markets ended mixed from early slide on prospect of easing geopolitical tensions in Ukraine after the Russia's defence ministry said that some Russian troops started returning to bases amid completion of their military drills. Sentiment was also boosted by the PBOC’s measure to inject more liquidity to shore up economic growth. Wall St staged a relief rally overnight (Dow: 1.2% to 34989; Nasdaq: 2.5% to 14139) whilst gold (-0.7% to USD1856) and Brent oil prices (-3.1% to USD93.5) slid in anticipation of deescalating tension in the Ukraine crisis and Putin said he saw room for further diplomatic manoeuver with the West. Nevertheless, Biden and NATO said a Russian attack on Ukraine remained possible and that the US would defend every inch of NATO territory.

Malaysia. Tracking improving sentiment in the global markets amid easing Russia-Ukraine tension and persistent net inflows from foreign institutions, KLCI registered its 5th consecutive winning streak (+15.8 pts to 1599.6) yesterday, mainly spurred by robust buying activities in the plantation sector. Market breadth turned positive as gainers beat losers by 519 to 447. In terms of funds flow, foreign investors recorded its highest net inflow in six months and turned net buyers for the 7th straight session with trades of RM327m (Feb MTD: +RM1.12bn; Jan: +RM332m). This was matched by net selling via local institutions (Feb MTD: -RM961m; Jan: -RM418m) and retailers (Feb MTD: -RM162m; Jan: +85m) amounting to -RM300m and -RM27m, respectively.

TECHNICAL OUTLOOK: KLCI

In the wake of the LT bullish breakouts and multiple long white candlesticks, KLCI could still trend higher as the bulls remain in control, given that the RSI and MACD have not shown any signs of abating. However, we expect formidable resistance near the 1613-1623 clusters, after rallying 96 pts from YTD low at 1503 (25 Jan). On the flipside, pullback supports are pegged at 1546-1560-1570 levels.

MARKET OUTLOOK

On the back of easing Russia-Ukraine geopolitical worries and a resumption in foreigners’ net buying (Feb MTD: +RM1.12bn; Jan: +RM332m), KLCI may continue its upward momentum towards our revised targets near 1613-1623 before major profit taking emerges amid steeply overbought outlook (after rallying from 1503 YTD low). On the flip side, any pullback is likely to be cushioned near 1546-1560-1570 levels, supported by aggressive economic reopening activities, high vaccination rates, elevated FCPO and crude oil prices.

Source: Hong Leong Investment Bank Research - 16 Feb 2022