MARKET REVIEW

Global. Tracking overnight fall in Wall St, Asian markets ended mixed amid sluggish China’s Caixin manufacturing PMI for March (amid soaring Covid-19 cases and restricted lockdowns), weak BOJ’s March quarterly business sentiment survey (amid supply disruption and surging raw material costs) and dimming hopes of Russia-Ukraine peace talks. Wall St ended higher in a choppy move (Dow: +140 pts to 34,818; Nasdaq: +41 pts to 14,261), shrugging off a fresh warning from the bond market of a looming recession as steady job gains and falling unemployment rate are expected to support the Fed to aggressively tightening monetary policy on the 3-4 May and 14-15 June FOMC meetings.

Malaysia. Encouraged by persistent foreign inflows (Malaysia is geopolitically neutral, relatively insulated economy compared to the West and exposure to commodity plays) and optimism from the transition to endemic phase and reopening of international borders from Friday, KLCI jumped 15.1 pts to 1,602.4. Market breadth stayed positive with 554 gainers vs 406 losers. Foreigners were the major buyers with net inflows of RM195m (YTD: +RM6.56bn) whilst the local institutions and retailers were the major sellers with net outflows of RM114m (YTD:-RM6.92bn) and RM81m (YTD: +RM267m), respectively.

TECHNICAL OUTLOOK: KLCI

Following the hammer-liked pattern on 31 March, KLCI rebounded further by 15.1 pts to 1,602.4 last Friday (-0.9-pt WoW) amid the reopening of international borders and transition to endemic phase on 1 Apr. In wake of the decisive close above multiple key MAs and rising oscillators, KLCI is likely to march higher towards 1,606-1,620 zones this week (formidable hurdle at 14M high 1,642) whilst supports are situated at 1,565-1,582 levels.

MARKET OUTLOOK

After falling 21 pts in March (gyrated within 1,540.9-1,620.4 band), we expect KLCI to gradually advance towards 1,606-1,620 levels in the near term, underpinned by (i) Malaysia’s relative appeal amid the geopolitical conflict, (ii) transition to endemicity, (iii) possible “election rally” and (iv) April is historically a good month for KLCI (average +1.6% growth in the last 20 years). Nevertheless, the choppy pattern is here to stay (supports: 1,565-1,582) amid a prolonged Russia-Ukraine conflict, Shanghai’s lockdowns, elevated inflation and worries if the Fed can engineer a “soft landing” for the US economy.

Source: Hong Leong Investment Bank Research - 4 Apr 2022