MARKET REVIEW

Global. The MSCI All Countries Asia Pacific Index rebounded 1.1 pts to 165.63 from heavy losses in the previous sessions, after the BOJ doubled down on its massive stimulus program and a pledge to keep ultra-low interest rates to support a fragile economy whilst President Xi called for an “all-out” campaign to build infrastructure in order to boost growth in the Covid-battered economy. The Dow rallied 1.85% to 33,916 whilst the Nasdaq skyrocketed 3.06% at 12,871, lifted by higher-than-expected earnings from Meta Platforms, Paypal, McDonald’s and Qualcomm, overshadowing the unexpected decline in US 1Q22 GDP (-1.4% vs +1.1% estimates). After trading hours, the Dow futures fell 0.4% following weak guidance from Amazon, Intel and Apple.

Malaysia. Tracking higher regional markets, persistent foreign buying and further relaxation of SOP effective 1 May to revive the economy lifted KLCI to end +11.3pts at 1,597.3, aided by buying interests in selected heavyweights i.e. PCHEM, IHH, PMETAL, MAYBANK, CIMB and TENAGA. Market breadth was negative as 584 gainers vs 354 losers. Foreigners (+RM71m, YTD: +RM7.29bn) were the major net buyers whilst retailers (- RM28m, YTD: +RM544m) joined the local institutions (-RM42m, YTD:-RM7.83bn) as net sellers.

TECHNICAL OUTLOOK: KLCI

KLCI is likely to be stuck in an extended range bound consolidation mode unless it can break the LT downtrend line hurdles near 1608 (from a 2Y high 1,696). A successful breakout would lift the index towards 1,620 (YTD high), 1,632 (250W MA) and 1,642 (14M high). On the downside, any decisive fall below the immediate support of 1,580 (uptrend line from 1,475) could trigger another round of selldown towards 1,550-1,565 levels.

MARKET OUTLOOK

Although KLCI may enjoy a follow-through rebound amid a strong overnight rally on Wall Street, any rebound is likely to be capped near 1,608-1,620 levels as investors adopt a risk off mode ahead of the long holidays next week (2-4 May), and FOMC meeting decision on 5 May. 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 based on the GE12-14 trends.

Source: Hong Leong Investment Bank Research - 29 Apr 2022