MARKET REVIEW

Global. Lingering worries of a potential Russian invasion of Ukraine continued to weigh on Asian markets despite reports that Biden accepted in principle a summit with Putin to de escalate tensions over Ukraine. However, Kremlin said there are “no concrete plans” yet for a summit between the Russian and US leaders. The Dow is set to open lower on 22 Feb after the Presidents' Day holiday, as the Dow futures slipped 180 pts (as at 8am) in anticipation of potential US and EU sanctions on separatist regions of Ukraine after Putin’s decree of recognising the independence and sovereignty of Donetsk People’s Republic and Luhansk People’s Republic. The latest development strengthens the expectations that Moscow could openly deploy troops into the two breakaway regions and would undermine Western hopes of a diplomatic resolution to the escalating crisis.

Malaysia. After surging 100 pts from YTD low of 1503 to 1603 last Friday, KLCI finally experienced a long-awaited pullback as the index slid 20.4 pts to 1582.7, led by a major selloff in plantation (-4.1%), technology (-3.7%), industrial (-1.8%) and telco (-1.2%) sectors. Market breadth was negative as losers thumped gainers by 719 to 338. In terms of funds flow, local institutions recorded their net outflows for the 12th straight session with net trades of -RM171m (Feb MTD: -RM1.72bn; Jan: -RM418m). This was matched by net buying via foreign institutions (Feb MTD: +RM1.71bn; Jan: +RM332m) and retailers (Feb MTD: +RM3m; Jan: +85m) amounting to RM42m and RM129m, respectively.

TECHNICAL OUTLOOK: KLCI

Following the dark cloud cover confirmation pattern yesterday, KLCI appeared ready to go into further consolidation mode. A decisive fall below 1570 may trigger more downside towards 1546-1560 zones. On the topside, we expect the resistances at 1613-1623 to cap gains until the market digests the grossly overbought readings.

MARKET OUTLOOK

On the back of heightened geopolitical crisis in Ukraine, negative KLCI technical perspective after yesterday’s slide, speculation of Fed’s next move amid elevated inflation, the Omicron wave in Malaysia and ongoing Feb reporting season, we expect further consolidation ahead with key downside support at 1546-1560-1570 levels (resistances: 1600-1613-1623).

VIRTUAL PORTFOLIO POSITION-FIG1

We Squared Off KOBAY (8.3% Loss) After Hitting Cut Loss Levels Yesterday.

Source: Hong Leong Investment Bank Research - 22 Feb 2022