MARKET REVIEW

Global. Asian markets rose as investors shrugged off concerns about the Russia-Ukraine conflict and crippling Western sanctions on Russia, in anticipation of more ceasefire talks ahead after the completion of the first round of negotiation in Belarus. Ahead of Powell’s testimonies on 2 & 3 Mar and a key Feb US jobs report (4 Mar), the Dow slid 597 pts to 33,295 (-9.9% from all-time high 36,952) whilst the Nasdaq plunged 219 pts at 13,532 (- 16.5% from all-time high 16,212), as market sentiment was dominated by headlines of the Ukraine-Russia crisis and speculation over Fed’s next move (FOMC meeting on 15-16 Mar) to tame the highest inflation in decades. Meanwhile, the Brent oil prices rallied to 7Y high (+7% to USD105) amid intensifying Russian-Ukraine war prompts supply shortage fears while the US 10Y Treasury yield tumbled 0.1% to 1.73% as investors sought safe haven and lowered the odds for a more aggressive Fed hike in March.

Malaysia. Bucking regional markets, KLCI fell 11.8 pts at 1,596.4 due to profit-taking activities after rallying 96 pts or 6.3% in Feb, mainly in banking, O&G and telecommunication counters. Market breadth was negative with 566 losers vs 404 gainers. Local institutions remained the major selling force for the 18th consecutive days with net trades of –RM267m (YTD: -RM3.48bn). This was matched by net buying via foreign institutions +RM231m (YTD: +RM3.41bn) and retailers +RM37m (YTD: +RM70m).

TECHNICAL OUTLOOK: KLCI

Following the weekly hammer candlestick formation and a breakout above 1,600 hurdles (also 200W SMA), KLCI hit a fresh new high at 1,620 (+117 pts from YTD low 1,503) before ending lower at 1,596.4 due to profit-taking selldown. In the near term, if there is no follow through buying to lift KLCI out of the 1614-1620 barriers, then get ready for another round of selling to take place next, targeting 1,565-1,580 range again.

MARKET OUTLOOK

In the wake of persistent strong foreign net inflows and KLCI’s successful breakout above 1,600 levels (200W SMA), the benchmark recorded a fresh YTD high at 1,620 yesterday but strong profit taking saw the index retreated to end at 1,596.4. After a huge 6.3% rally in Feb, we see a bumpy road ahead in March (resistance: 1,620-1,633-1642; supports: 1545- 1,565-1,580) due to the tumultuous Ukraine-Russia war and the upcoming rate hike cycle amid elevated inflation (escalating energy & food prices amid supply shocks and harsher sanctions on Russia).

VIRTUAL PORTFOLIO POSITION-FIG 1

Yesterday, we took profit on EVERGRN amid expiry (5.6% gain) and AFFIN (4.9% gain) after Hitting the R1 Target at RM1.91.

Source: Hong Leong Investment Bank Research - 2 Mar 2022