MARKET REVIEW

Global. Pending the Russia-Ukraine ceasefire talks’ outcome and FOMC meeting results tomorrow, Asian markets were in a sea of red on Wednesday, led by routs in SHCOMP (- 4.95%) and HSI (-5.71%) amid Covid-19 crisis in China, Beijing’s close relationship with Russia (may trigger a global backlash and potential sanctions against China), and renewed tech slump due to regulatory risks and the risk of Chinese firms delisting from the NYSE. Despite escalating Russia-Ukraine war, China’s Covid lockdowns (may cause havoc on the global tech supply chain) and the fears of looming aggressive Fed monetary policy tightening, the Dow staged a long awaited 599-pt rally to 33,544. Sentiment was further helped by sliding oil prices (Brent price slid 7.7% to USD98.5) due to easing supply disruption fears on Russia-Ukraine ongoing ceasefire talks and potential slowdown in Chinese demand amid Covid-19 lockdowns coupled with rising prospects for a US-Iran nuclear deal that could add extra supplies.

Malaysia. Tracking regional markets’ selloff, KLCI slipped 10 pts to record its 3rd consecutive decline, triggered by the slide in key technology (-3.47%), energy (-3.26%), industrial products & services (-2.8%) and plantation (-1.8%) sectors. Market breadth was negative with 739 losers edged 234 gainers. In terms of funds flow, foreign investors (27th session of straight net inflows) and local retailers net bought RM 272m (YTD: +RM4.91bn) and RM9m (YTD: +RM521m) shares, respectively whilst local institutions net sold RM282m shares (28th session of net outflows, YTD: -RM5.42bn).

TECHNICAL OUTLOOK: KLCI

In the wake of the lingering external headwinds, KLCI fell for the 3rd straight session to end at 1,557.4. In the near term, the index is likely to lock in a range bound consolidation mode. Key downside supports are situated at 1,545 (200D MA) and 1,535 (uptrend line from 1,475 whilst upside hurdles are pegged at 1,585-1,600-1,620.

MARKET OUTLOOK

Bursa Malaysia may get a fillip from an overnight rally from Wall St (key resistances: 1,573- 1,585-1,600) though investors remain braced for volatility from the ongoing Russia-Ukraine war, looming FOMC meeting outcome tomorrow coupled with worries over the Covid situation in China. However, with our Malaysian bourse still showing resilience in the face of increased foreign net inflows (27th session of straight net inflows; YTD: +RM4.91bn; 2021: - RM3.02bn), high crude oil and CPO prices, as well as Malaysia’s shift into endemic phase and reopening of international borders on 1 April, the signs are implying limited downside risk going forward (1,500-1,535-1,545).

Source: Hong Leong Investment Bank Research - 16 Mar 2022