MARKET REVIEW

Global. Asian markets continued of being held hostage by a perfect storm of Russia Ukraine war (dragged on for the 12th day) as Putin vowed to press ahead with his invasion unless Kyiv surrendered. Meanwhile, Brent oil rallied to a 14Y high, fuelling concerns that global economies are at risk of stagflation after the US and its allies are considering a ban on Russian oil imports. Overnight, the Dow tanked 797 pts to 32,817 (-11.2% from all-time high 36,952) whilst the Nasdaq slumped 482 pts at 12,831 (-20.9% from all-time high 16,212) as fears of a prolonged Russia-Ukraine conflict (the 3rd round of talks ended with little progress) pushed commodity prices higher, stoking fears that war-fuelled inflation will be here to stay longer than expected and derail economic growth.

Malaysia. Tracking global markets’ rout, KLCI tumbled 31.4 pts to 1,572.6 (-48 pts from YTD high at 1,620) as sentiment was rattled (1085 losers vs 152 gainers) by broad-based selloff in the ACE (-6.5%), technology (-6.4%), smallcap (-3.9%), property (-3.6%), healthcare (-3.4%), finance (-2.6%) and plantation (-2.2%) sectors. In terms of funds flow, foreign investors (21st session of straight net inflows) and local retailers net bought RM143m (YTD: +RM3.91bn) and RM58m (YTD: +RM287m) shares, respectively whilst local institutions net sold RM200m shares (22nd session of net outflows, YTD: -RM4.19bn).

TECHNICAL OUTLOOK: KLCI

As expected, KLCI finally succumbed to a long-awaited pullback yesterday (-31.4 pts to 1,572.6) after recent surge from YTD low of 1,503 (25 Jan) to YTD high 1620 (1 Mar). In the wake of overnight slump in Wall St and bearish long-legged KLCI candlestick, the benchmark is slated to revisit the crucial 200D MA near 1,545 soon. A decisive break down below this level will trigger further slide towards 1,500-1,530 zones. Meanwhile, stiff resistances are pegged at 1,600-1,620 levels.

MARKET OUTLOOK

Mirroring overnight plunge in Wall St, the index is likely to experience further wild swings in the near term (crucial supports: 1,530-1,545) amid a protracted Russia-Ukraine war, extensive Western allies’ sanctions against Russia, the implications on global growth due to elevated inflation and speculating Fed’s next move during its 15-16 Mar FOMC meeting. On the positives, Bursa Malaysia’s defensive traits (commodity-centric industries benefitting from current high crude oil and CPO prices ), high vaccination rates, expectations of international borders reopening announcement this week, and robust foreign net inflows (YTD: +RM3.91bn) may cushion downside support near 1,500 levels.

VIRTUAL PORTFOLIO POSITION-FIG2

On the back of the heightened Russia-Ukraine conflict, we squared off CIMB (3.3% loss) and TM (10.7% Loss) on 7 March.

Source: Hong Leong Investment Bank Research - 8 Mar 2022