MARKET REVIEW

Global. Ahead of the key US Feb CPI data tonight and persistent Russia-Ukraine conflict, Asian markets ended mixed after the US and UK announced a ban on Russian oil and other energy, sending commodity prices surging which fuelled further inflationary pressures and global growth risks. After days of persistent rout, the Dow rallied 654 pts to 33,286 whilst the Nasdaq surged 460 pts to 13,255 as Brent oil prices plunged 12% to USD112.5 after UAE supported to pump more oil into the market. Sentiment also turned positive on news of continuous ceasefire talks between the Russia-Ukraine after Ukraine said it was open to discussing Russia’s demand for neutrality.

Malaysia. After sliding 71.7 pts in three days, KLCI jumped 15.5 pts to 1,562.3 amid bargain hunting activities on selected index-linked heavyweights in the banking, energy and plantations sectors, underpinned by Malaysia’s transition to the endemic phase and the reopening of international borders effective 1 April, and robust foreign net inflows. Market breadth turned positive for the 1st day in eight as 799 gainers overturned 272 losers. In terms of funds flow, foreign investors (23rd session of straight net inflows) and local retailers net bought RM141m (YTD: +RM4.13bn) and RM83m (YTD: +RM492m) shares, respectively whilst local institutions net sold RM224m shares (24th session of net outflows, YTD: -RM4.62bn).

TECHNICAL OUTLOOK: KLCI

Following a 3-day 71.7-pt slump, KLCI finally staged a long-awaited technical rebound to end +15.5 pts at 1,562.3 yesterday. We expect market to remain volatile pending more clarity from the Russia-Ukraine conflict with major supports at 1545 (200D MA) and 1530 (the uptrend line from 1503). Hence, any rebound in the near-term is likely to encounter strong resistance around the 1,575-1600 levels.

MARKET OUTLOOK

We expect volatility to prevail and KLCI’s technical rebound could face formidable resistance at 1,575-1,600 zones as investors await more clarity from the ongoing Russia Ukraine ceasefire talks and Fed’s next move on 15-16 Mar FOMC meeting. Nevertheless, 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 may provide the near term upside catalysts.

Source: Hong Leong Investment Bank Research - 10 Mar 2022