MARKET REVIEW

Global. Asian markets ended higher, cheered by BOJ’s ultra-easy monetary policy stance, falling oil prices and hopes of further progress in Russia-Ukraine ceasefire talks in Turkey, shrugging off concerns over inversions in bond yields that pointed to a looming economic downturn and China’s two-stage lockdown amid surging Covid-19 cases. Ahead of the key non-farm payroll report on 1 Apr, Wall St ended higher (Dow: +338 pts to 35,294; Nasdaq: +252 pts to 15,239), as investors celebrated growing optimism of a de-escalation in the Ukraine-Russia conflict and falling energy prices coupled with a strong March consumer confidence index, ignoring surging inflation and worries about yield curve inversions amid Fed’s hawkish tilt in policy path.

Malaysia. Bucking higher regional markets, KLCI slid 14.5 pts to 1,583.4, led by selldown in IHH, PBBANK, MAYBABK, PETDAG and TENAGA as investors reshuffled and rebalanced their portfolios ahead of 2Q22. Market breadth was negative as 550 losers thumped 358 gainers. Local retailers and foreigners were the major buyers with net inflows of RM58m (YTD: +RM415m) and RM31m (YTD: +RM6.27bn), respectively whilst the local institutions remained as the major sellers with net outflows of RM88m (YTD:-RM6.69bn).

TECHNICAL OUTLOOK: KLCI

After surging 35.1 pts in two weeks, KLCI ended lower for a 2nd day (-14.5 pts to 1,583.4) on profit taking. Following the long black candlestick and closing a tad below the 30D MA, the benchmark may continue to drift lower supports towards 1575 (38.2% FR) and 1567 (uptrend line support or 50D MA) before staging a technical rebound. Overall, 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.

MARKET OUTLOOK

After falling almost 20 pts in two days, KLCI may stay volatile in the coming days as investors reposition portfolios ahead of the 2Q in the wake of Shanghai’s restricted lockdown to contain surging Covid-19 cases, unabated high inflation and lingering worries of US inverted yield curves amid Fed’s hawkish stance. However, the downside risk is likely to be well-cushioned with recovery plays and commodity stocks to 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 near 1,600-1,620 levels.

VIRTUAL PORTFOLIO POSITION

In the wake of the market uncertainty, we decided to square off TUNEPRO (17.6% gain), ASTRO (1Q22 pick: 14.3% gain), FLBHD (1Q22 pick: 32.1% gain) and MYEG (1Q22 pick: 7.5% loss) on 29 March

Source: Hong Leong Investment Bank Research - 30 Mar 2022