MARKET REVIEW

Global. Tracking Wall St slump, Asian markets slid on concerns over rapid US rate hikes and a protracted Russia-Ukraine war (entering into a 3rd month). Sentiment was also wrecked by a 5.1% plunged in SHCOMP as investors fretted the lack of aggressive measures to shore up a battered economy, following worsening Covid-19 cases in Shanghai and a fresh outbreak in Beijing. The Dow plunged as much as 488 as investors weighed on the extended lockdown in China and a hawkish Fed ahead of the 3-4 May FOMC meeting. However, the index staged a sharp reversal to close +238 pts higher to 34,096 as dip-buying in tech stocks following a drop in US 10Y bond yields (-0.08% to 2.82%) ahead of a crucial week of big tech results steadied the broader market. About 160 companies in the S&P 500 are expected to report earnings this week, with key focus will likely on Amazon, Apple, Alphabet, Meta Platforms and Microsoft.

Malaysia. In line with regional markets’ selloff, KLCI retreated 12 pts at 1,590 (after rising 20.8 pts in three days), led by declines in selected heavyweights such as PMETAL, AXIATA, PCHEM, PETDAG, MAXIS and MAYBANK. Market breadth was bearish as 876 losers overwhelmed 236 gainers. Foreigners (-RM44m, YTD: +RM7.11bn) and local institutions (-RM18m, YTD:-RM7.64bn) emerged as major net sellers whilst retailers stayed net buyers for a 2nd day (+RM63m, YTD: +RM524m).

TECHNICAL OUTLOOK: KLCI

After staging a 3-day 20.8-pt technical rebound, KLCI resumed its fall in sync with last Friday’s Wall St rout. In the near term, KLCI is likely to stuck in an extended range bound consolidation mode unless it can break the 1,600-1,620 hurdles successfully to retest higher upside to 14M high at 1,642. On the downside, any decisive fall below the immediate supports of 1,575 (uptrend line from 1,475) could trigger another round of selldown towards 1,565 (38.2% FR) and 1,548 (200D MA) levels.

MARKET OUTLOOK

Ahead of the long Workers’ day and Raya holidays next week (2-4 May) investors are expected to adopt a risk-off mode (supports: 1,548-1,575; resistances: 1,600-1,620), grappled by (i) ongoing 1Q22 results season (US and Malaysia); (ii) protracted Russia Ukraine war; (iii) FOMC meeting on 3-4 May; and (iv) China Covid-19 lockdowns. That said, a sharp selloff may be cushioned by (i) Malaysia’s relative safe-haven appeal in wake of the geopolitical conflict; (ii) transition to endemicity; and (iii) possible pre-election rally.

Source: Hong Leong Investment Bank Research - 26 Apr 2022