MARKET REVIEW

Global. Tracking lower Wall St, the MSCI All Countries Asia Pacific index shed 3.26 pts to 704.11 last Friday as sentiment was dampened by US slower March retail sales, rising jobless claims, surging US 10Y Treasury yield (+0.13% to 2.83%) and disappointment by the PBoC's decision to leave the MLF rates unchanged (despite extended Covid-19 lockdowns in Shanghai and major cities). Wall St was closed last Friday due to the Good Friday holiday. WoW, the Dow slipped -0.8% at 34,451 while the Nasdaq -2.6% to 13,351, weighed down by a 40Y high March CPI reading, fading hopes of the Russia-Ukraine ceasefire, mixed economic data and ongoing 1Q22 earnings season.

Malaysia. In sync with the losses in ASEAN markets, KLCI slipped 6.9 pts at 1,589 (its 4th decline out five) and 18.9 pts WoW, on the back of a dearth of fresh catalysts and negative external headwinds. Market breadth was tepid as 487 losers edged 310 gainers with trading valued tumbled 30% to RM1.4bn. Local institutions (-RM29m, YTD:-RM7.35bn) were the major sellers whilst foreigners (+RM13m, YTD: +RM6.91b n) joined retailers (+RM16m, YTD: +RM435m) as major net buyers.

TECHNICAL OUTLOOK: KLCI

Following the shooting star formation on 11 Apr and closing sharply below 10D/20D MAs, KLCI’s near term outlook is turning more negative. A decisive fall below 1,586 (50D MA) may trigger further selldown towards 1,575 (uptrend line support) and 1,561 (50% FR). On the flip side, a strong reclaim above 1,600-1,614 hurdles could spur the index to retest YTD high at 1,620 and 14M high at 1,642 zones.

MARKET OUTLOOK

KLCI is expected to remain choppy in the short term (supports: 1,547-1,561-1,575; resistances: 1,600-1,620), driven by (i) the kick-start of 1Q22 results season (US and Malaysia), (ii) protracted Russia-Ukraine war and harsh sanctions against Russia, (iii) hawkish Fed, (iv) China Covid-19 lockdowns and (v) stiff headwinds for global GDP growth and corporate earnings expectations, However, a sharp selloff may be cushioned by (i) Malaysia’s relative safe-haven appeal amid the geopolitical conflict, (ii) transition to endemicity, and (iii) possible ‘pre-election rally’ (3-6 months ahead of the polling dates) based on past GE12/13/14 trends.

Source: Hong Leong Investment Bank Research - 18 Apr 2022