MARKET REVIEW

Global. After rebounding from the 52-week low of 530.9 to a high of 591.7, MSCI Asia ex Japan index eased 3.3 pts on profit taking to end at 588.6 yesterday amid lingering concerns over the Russia-Ukraine war and surging inflationary pressures, with the Fed’s ultra-hawkish rhetoric to combat inflation. Wall St staged a solid rebound from a rout on 23 Mar (Dow: +349 pts to 34,708; Nasdaq: +269 pts to 14,192) as the strongest jobless claims report since 1989 pointed to underlying strength in the US economy, raising confidence to the Fed that they can raise rates more quickly to battle inflation. The positive backdrop that the Fed is able to engineer a soft landing for the US economy offset heightened Russia-Ukraine conflict as Western leaders agreed to increase military aid to Ukraine and tighten sanctions on Russia at the Brussels meeting.

Malaysia. Tracking lower Wall St and regional markets, KLCI traded mostly in the negative territory before staging a last minute rebound to end 1.1 pts higher at 1,599, with buying interest in MAYBANK, GENTING, PETDAG, TENAGA, CIMB and PCHEM. Market breadth remained positive as the advancers led the decliners by 482 -to-429. By investor type, foreigners remained net buyers with net inflows of RM 177m (YTD: +RM6bn), followed by local retailers’ +RM15m (YTD:+RM353m) whilst domestic institutions logged net selling trades amounting to RM192m (YTD: -RM6.36bn).

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 steady recovery to end at 1,599 yesterday. In the wake of the bullish three outside up formation recently and closing above multiple key MAs, we expect KLCI to revisit 1,600-1,620 levels in the short term. A decisive breakout above 1,620 will lift the index to 52-week high at 1,642 territory. Key downside supports remain at 1,586 (30D MA), 1,565 (38.2% FR) and 1,545 (200D MA) zones.

MARKET OUTLOOK

Barring any decisive fall below the support trendline near 1,563 levels, KLCI’s uptrend towards 1,600-1,620 levels remains intact, supported by: 1) persistent foreign net inflows, 2) high crude oil and CPO prices, 3) Malaysia’s shift into endemic phase and reopening of international borders on 1 April, and 4) positive spill over from the MRT3 announcement. Nevertheless, volatility is here to stay as the risks of fallout from a prolonged Russia Ukraine conflict, elevated inflation, FOMC’s latest hawkish tilt outlook, as well as the resurgence of Covid-19 mutations worldwide, would exert heavy toll on global economies.

Source: Hong Leong Investment Bank Research - 25 Mar 2022