MARKET REVIEW

Global. Asian markets extended declines following Russia’s troops into breakaway regions of eastern Ukraine, intensifying tensions between the West and Russia amid worries over potential full-scale Russia-Ukraine battle. Wall St extended its slump overnight (Dow: -465 pts to 33,131/-10.3% from all-time high 36,952; Nasdaq: -344 pts to 13,037/-19.6% from all-time high 16,212) as sentiment was dampened by mounting concerns of a full-scale Russian invasion after Ukraine declared a state of emergency. Meanwhile, the US 10Y yield rose 0.05% to 1.99%, as investors monitored Russia-Ukraine events and commentaries from Fed officials for clues on the likely path of monetary tightening.

Malaysia. Defying Wall St and regional markets’ slide, KLCI jumped 9.2 pts to 1,586.1, snapping its 3-day losing streak amid persistent foreign net inflows (recorded its 13th consecutive net buys of RM2.04bn shares) and positive expectations of potential border reopening on 1 Mar. Market breadth turned positive with 621 gainers outnumbered 372 losers. In terms of funds flow, local institutions recorded their net outflows for the 14th straight session with net trades of –RM4m (Feb MTD: -RM1.98bn; Jan: -RM418m), followed by retailers –RM156m (Feb MTD: -RM27m; Jan: +85m). This was matched by net buying via foreign institutions +RM160m (Feb MTD: +RM2.0bn; Jan: +RM332m).

TECHNICAL OUTLOOK: KLCI

As anticipated, the hammer candlestick pattern on 22 Feb gave us a glimmer of hope that further downside risk is likely to be cushioned at 1,560-1,567 levels, with 200D MA at 1,546 to provide another sound support. However, any technical rebound from 1,567 may encounter stiff resistance near 1,600-1,614 amid external headwinds.

MARKET OUTLOOK

On the back of worsening geopolitical crisis in Ukraine amid fears of potential full scale Russia-Ukraine war, negative KLCI technical perspective, speculation of Fed’s next move amid elevated inflation, the Omicron wave in Malaysia and ongoing Feb reporting season, we expect KLCI to engage in an extended consolidation with key resistances pegged at 1,600-1,613-1,623. On downside support, the KLCI is likely to be cushioned near 1,545- 1,556-1,567 levels, underpinned by aggressive economic reopening activities, high vaccination rates, active interests in plantation & OG heavyweights amid elevated FCPO and oil prices, and the NSC’s proposals for border reopening on 1 Mar.

VIRTUAL PORTFOLIO POSITION-FIG2

Yesterday, we took profit on MEDIA (25.6% gain) after hitting LT objective at RM0.54 whilst squared off CTOS (-6.7% loss) at cut loss level near RM1.66.

Source: Hong Leong Investment Bank Research - 24 Feb 2022