MARKET REVIEW

Global. Asian markets were in a sea of red after Russia invaded Ukraine following request for help from separatist leaders from Ukraine’s Donetsk and Luhansk regions to repel Ukrainian forces. Overnight, the Dow staged a dramatic reversal from a session low, ending +92 pts to 33,223 after sliding as much as -859 pts at 32,272 (-12.7% from all-time high 36,952), led by bargain hunting activities in technology stocks as the Nasdaq rallied 436 pts to 13,473 after hitting a trough at 12,587 (-22% from all time high 16,212). Investors were relieved following Biden’s address that the US forces will not engage in war with Russia and will introduce a new wave of sanctions against Russia in a broad effort to isolate Moscow from the global economy after ‘premeditated’ Ukraine attack.

Malaysia. After sliding as much as 20.9 pts to 1,565.2 pts, KLCI managed to reduce the losses to -12.3 pts at 1,573.9, driven by active buying interests on plantation (+1.93%) and energy (+1.79%) related stocks (boosted by record high FCPO and multi-year high Brent oil prices). Market breadth turned bearish 960 losers overwhelmed 250 gainers. In terms of funds flow, local institutions recorded their net outflows for the 15th straight session with net trades of –RM55m (Feb MTD: -RM2.03bn; Jan: -RM418m), followed by retailers –RM24m (Feb MTD: -RM52m; Jan: +85m). This was matched by net buying via foreign institutions +RM79m (Feb MTD: +RM2.08bn; Jan: +RM332m).

TECHNICAL OUTLOOK: KLCI

Despite the 12.3 pts retreat yesterday, the hammer (22 Feb) and long-legged (24 Feb) candlesticks patterns could provide a glimmer of hope that further downside risk is likely to be cushioned at 1,560 levels, with 200D MA at 1,545 as stronger support. However, any technical rebound from 1,565 may encounter stiff resistance near 1,600-1,614 amid lingering external headwinds.

MARKET OUTLOOK

Tracking overnight relief rally from Wall St and Bursa Malaysia’s resilience in building an immediate support above 1,545-1,560 zones, we expect KLCI to stage a technical rebound today towards 1,589-1,600 levels. Nevertheless, wild swings in the market prevails (resistances: 1614-1623-1642) as investors continue to weigh the Ukraine crisis, speculation of Fed’s next move amid elevated inflation (compounded by the new sanctions against Russia), as well as the Omicron wave in Malaysia.

Source: Hong Leong Investment Bank Research - 25 Feb 2022