MARKET REVIEW

Global. Tracking overnight rally in Wall St and retreating commodity prices, Asian markets ended higher in cautious mode as investors await the Russia-Ukraine ceasefire talk outcome and a key US Feb CPI data in the evening. Overnight, the Dow plunged as much as 467 pts before narrowing the losses at 112 pts to 33,174, as investors weighed the breakdown of Russia-Ukraine ceasefire negotiations, escalating geopolitical risks in Ukraine and a 40Y high US Feb CPI at 7.9%, coupled with the prospects of higher interest rates when the Fed meets on 15-16 March.

Malaysia. After sliding 71.7 pts in three days (4-8 Mar), KLCI recorded a back-to-back gain of 18.2 pts yesterday at 1,580.5 amid bargain hunting activities on selected index-linked heavyweights in the banking, utilities and telco sectors, underpinned by Malaysia’s strategic shift into endemic phase and reopening of international borders on 1 April. Market breadth turned positive for a 2nd day as 608 gainers overturned 421 losers. In terms of funds flow, foreign investors (24th session of straight net inflows) and local retailers net bought RM173m (YTD: +RM4.3bn) and RM17m (YTD: +RM509m) shares, respectively whilst local institutions net sold RM190m shares (25th session of net outflows, YTD: - RM4.8bn).

TECHNICAL OUTLOOK: KLCI

After sliding from 1,620 (YTD high) to a low of 1,541, KLCI finally staged a 2 -day rebound to end at 1,580.5 yesterday, reclaiming above the multiple key MAs. Given the formation of bullish three outside up pattern, we expect the benchmark to retest the 1,600 psychological levels and a stiff hurdle at 1,620 levels. On the downside, major supports are pegged at 1,541 and 1,531 (uptrend line) zones.

MARKET OUTLOOK

We expect volatility to prevail and KLCI’s technical rebound could face formidable barriers near 1,600 to 1,620 (YTD high) zones as investors await another round of Russia-Ukraine ceasefire talks and Fed’s policy 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 on 1 April, coupled with robust foreign net inflows may provide the near term upside catalysts.

Source: Hong Leong Investment Bank Research - 11 Mar 2022