MARKET REVIEW

Global. Led by a major rout in SHCOMP (-2.3%), Nikkei 225 (-1.7%) and HSI (-1.3%), Asian markets ended in red as investors feared that a prolonged Russia-Ukraine conflict, elevated inflation and the extensive Western allies’ sanctions against Russia would derail the global growth. Ahead of the key US Feb CPI data (10 Mar) and upcoming Russia Ukraine talks this week, the Dow surrendered a 585-pt gain to 185 pts lower at 32,632 (- 11.7% from all-time high 36,952) whilst the Nasdaq eased 35 pts at 12,795 (-21% from all time high 16,212) after Biden announced a US ban on imports of Russian oil, a move that threatens supply chains and strengthens further inflationary pressure, stoking fears that war-fuelled inflation will be prolonged and derail economic growth.

Malaysia. Mirroring overnight slump from Wall St, Bursa Malaysia closed lower for the 3rd consecutive day (-25.7 pts to 1,546.9) on continued selling pressure in the technology (- 6%), industrial products (-3%), energy (-2.4%), telco (-2.4%) and ACE (-2.4%) sectors. Market breadth was negative as losers 794 overturned 272 gainers. In terms of funds flow, foreign investors (22nd session of straight net inflows) and local retailers net bought RM76m (YTD: +RM3.98bn) and RM122m (YTD: +RM408m) shares, respectively whilst local institutions net sold RM198m shares (23rd session of net outflows, YTD: -RM4.39bn).

TECHNICAL OUTLOOK: KLCI

As expected, KLCI continued to trend southbound amid overnight slump in Wall St and bearish indicators, sliding 25.7 pts at 1546.9 yesterday (a tad above our key envisaged 200D MA or 1545). We expect further swings in the near term in the wake of lingering external headwinds. A decisive break down below 1545 and 1530 (the uptrend line from 1503) will trigger further fall near 1,500 zones. Meanwhile, stiff resistances are pegged at 1,575-1,600-1,620 levels.

MARKET OUTLOOK

On the back of lingering external headwinds and bearish technical indicators, KLCI 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, Malaysia’s transition to the endemic phase and the reopening of international borders effective 1 April, and robust foreign net inflows (YTD: +RM3.98bn) may cushion further selloff near 1,500 psychological levels.

Source: Hong Leong Investment Bank Research - 9 Mar 2022