MARKET REVIEW

Global. Ahead of the resumption of the Russia-Ukraine ceasefire talk today in Turkey, Asian markets ended mixed as investors grappled with the risks of an economic downturn from aggressive tightening of US monetary policy and prolonged Russia-Ukraine conflict. Sentiment was also dampened by the two-stage lockdown in Shanghai following the resurgence of the Covid-19 outbreak. Wall St ender higher (Dow: +95 pts to 34956; Nasdaq: +185 pts to 14355), as a Tesla-led surge (rallied 8% on news that it will seek investor approval for a stock split) in growth stocks offsetting weakness in cyclical stocks amid further cues from the bond market pointing to a potential economic downturn. Meanwhile, Brent oil prices slid USD8.17 to USD112.48 as fears that the restricted lockdown in China due to soaring Covid-19 cases could hurt demand and fresh Russia Ukraine peace talks cooled worries about supply disruptions.

Malaysia. Tracking the mixed regional markets, KLCI fell 5.4 pts to 1,598 on profit taking, snapping its 3-day winning streak. Market breadth was negative as losers surpassed gainers 527 to 339 while total turnover decreased to 2.41bn shares worth RM1.89bn from 2.78bn shares valued at RM2.22bn last Friday. Foreigners remained the major buyers with net inflows of RM21m (YTD: +RM6.24bn), followed by retailers RM17m (YTD: +RM357m) whilst the local institutions were major sellers with net outflows of RM138m (YTD:- RM6.6bn).

TECHNICAL OUTLOOK: KLCI

After surging 35.1 pts in two weeks, KLCI slipped 5.4 pts to 1,598 on profit taking. Barring a decisive breakdown below 30D MA near 1,587, we remain cautiously optimistic that the index may revisit 1,600-1,620 levels, albeit in a choppy move. A successful breakout above 1,620 will lift the index to retest 14M high at 1,642. On the flip side, falling below 1,585 will drive KLCI lower again toward 1,565 (38.2% FR) and 1,545 (200D MA) levels.

MARKET OUTLOOK

Technically, KLCI may stay volatile in the near term as investors weigh on Shanghai’s restricted lockdown to contain surging Covid-19 cases, a fresh Russia-Ukraine talk in Turkey today, elevated inflation and Fed’s latest hawkish path. However, the downside risk is likely to be well-cushioned with recovery plays and commodity stocks will remain in focus, 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. Weekly supports are pegged at 1565-1580 whilst resistances are situated at 1,600-1,620 levels.

VIRTUAL PORTFOLIO POSITION-FIG1

In the wake of the market uncertainty, we decided to square off SUNWAY (1.2% gain) and INARI (12.3% Gain) on 28 March.

Source: Hong Leong Investment Bank Research - 29 Mar 2022