MARKET REVIEW

Global. Despite hopes of more stimulus measures from China to kick start the slowing economy and the easing audit restrictions by China’s securities watchdog that may reduce the immediate threat of a mass delisting of US-listed Chinese companies, Asian markets ended mixed as investors remained cautious amid US yield curve inversions and speculations of further sanctions against Russia. The Dow jumped 103 pts to 34,922 whilst Nasdaq surged 271 pts to 14,532 amid a Twitter (+27% after Elon Musk bought a 9.2% stake) and Tesla (+5.6% after posting record vehicle deliveries in 1Q22) led -rally, and a resumption of Russia-Ukraine ceasefire talks today. Still, sentiment remained clouded by the proposed new sanctions against Russia and concerns over looming recessions amid yield curve inversions.

Malaysia. After rallying 19 pts in two days, KLCI eased 3.5 pts on profit-taking, mainly led by a pullback in banking stocks. However, market breadth stayed positive with 617 gainers vs 355 losers. Foreigners were the major buyers with net inflows of RM93m (YTD: +RM6.75bn) whilst the local institutions and retailers remained major sellers with net outflows of RM47m (YTD:-RM6.97bn) and RM46m (YTD: +RM221m), respectively.

TECHNICAL OUTLOOK: KLCI

Despite the mild profit taking yesterday, we remain constructive of near term KLCI outlook in wake of the decisive close above multiple key MAs and improving oscillators. A decisive breakout above 1,606-1,620 zones will spur further upside towards the 14M high at 1,642 whilst supports are situated at 1,565-1,575 levels.

MARKET OUTLOOK

After sliding 21 pts MoM in a volatile pattern in March (gyrated within 1,540.9-1,620.4 band), KLCI is expected to march higher in April towards 1,606-1,620-1,642 levels, underpinned by (i) Malaysia’s relative appeal amid the geopolitical conflict, (ii) transition to endemicity, (iii) possible “election rally”, and (iv) 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: 1,565-1,575) amid a prolonged Russia-Ukraine conflict, extended Shanghai lockdowns, elevated inflation and worries of the Fed can engineer a “soft landing” for the US economy.

Source: Hong Leong Investment Bank Research - 5 Apr 2022