MARKET REVIEW

Global. Ahead of the quarterly triple witching and Biden-Xi call on Friday evening, Asian markets ended mildly lower as investors assessed the mixed signals from the Russia Ukraine peace talks and the Fed’s shift towards hawkish monetary policy. Last Friday, Wall St ended higher (Dow: +274 pts to 34,755; Nasdaq: 279 pts to 13,894) as investors digested Biden-Xi call and cheered a Russian bond payment that averted a historic sovereign default. Sentiment was also boosted by positive expectations that the Fed is able to engineer a soft landing for the US economy despite its hawkish rhetoric policy.

Malaysia. In line with the mixed regional markets and the semi-annual review of the FTSE Global Equity Index Series - Asia Pacific ex Japan, Japan and China, KLCI ended flat (+0.4-pt to 1,591.3) after fluctuating within the 1,583.3-1,594.8 band. Market breadth turned negative with 468 losers beating 425 gainers. In terms of funds flow, foreign investors net bought RM32m trades (YTD: +RM5.6bn) whilst local institutions and retailers net sold RM23m (YTD: -RM5.9bn; 31st session of straight exodus) and RM9m (YTD: +RM300m) shares, respectively.

TECHNICAL OUTLOOK: KLCI

Following the 4.9% or 79 pts slide from YTD high of 1,620 to a low of 1,541, the index managed to stage a solid recovery to end at 1,591 last Friday (+23 pts WoW). Tracking Wall St’s relief rally and the successful close above multiple key MAs, we expect KLCI to retest 1,600 levels before heading to stiff barrier at 1,620 in the short term. Key supports remain at 1,575 (38.2% FR), 1,561 (50% FR) and 1,545 (200D MA) zones.

MARKET OUTLOOK

Tracking further relief rally from Wall St, KLCI could inch higher to retest 1,600-1,620 levels (key support: 1,545-1,561-1,575) this week, driven by 1) persistent foreign net inflows (30th

session of straight net buying; YTD: +RM5.6bn; 2021: -RM3.02bn), 2) high crude oil and CPO prices, 3) Malaysia’s shift into endemic phase and reopening of international borders on 1 April coupled with 4) the MRT3 announcement last week. Nevertheless, cautious sentiment prevails amid the heightened Russia-Ukraine conflict and slow progress in the ceasefire talks, elevated inflation, FOMC’s latest hawkish tilt outlook, as well as worries over the Covid-19 situation in China. These risks will continue for longer than-expected and exact a heavy toll on global economies.

Source: Hong Leong Investment Bank Research - 21 Mar 2022