MARKET REVIEW

Global. Taking cues from a tech selloff on Wall Street, Asian markets ended mixed as investors awaited the May FOMC meeting minutes last night for further clues on the upcoming rate-hike path, as well as monitored Beijing’s stringent quarantine efforts to stem its month-long Covid outbreak while Shanghai prepares to lift a prolonged lockdown. The Dow (+192 pts to 32,120, -13% from all-time high 36,952) and Nasdaq (+170 pts to 11,435, -29.5% from all-time high 16,212) finished higher in another choppy session as Wall Street digested the Fed’s May meeting minutes. Sentiment seemed to be supported by the lack of hawkish surprise, underpinned by two additional 0.50% rate increases during the upcoming 14-15 June and 26-27 July meetings. Overall, the Fed agreed that more restrictive policy could become appropriate, their aggressive approach to tightening early could leave the central bank “well positioned later this year to assess the effects of policy firming”.

Malaysia. Bucking the mixed regional markets, KLCI snapped a 4-day losing streak of 23.6 pts to end +4.3 pts at 1,535.6, supported by buying demand for selected financial services and plantation counters. However, market breadth remained negative but improved to 0.53 from 0.35 previously. In a lacklustre trade, foreign institutions were the major net buyers (+RM2m, YTD: +RM6.81bn) after net sold RM199m shares in the last wo days. Meanwhile, local institutions (-RM2m, YTD: -RM7.88bn) and retailers (-RM0.2m, YTD: +RM1.07bn) emerged as the net sellers.

TECHNICAL OUTLOOK: KLCI

After sliding 114 pts from 1,615 (5 May high) to a low of 1,530 (24 May low), KLCI staged a 4.3 pts rebound to 1,535 yesterday, snapping a 4-day losing streak. We may Tracking witness further oversold rebound to reclaim above the 200D MA hurdle at 1,552. A successful breakout may lift the benchmark higher towards 1,565 (38.2% FR) and 1580 (uptrend line from 1475) levels. On the downside, key supports are situated at 1,530 (61.8% FR), 1,520 (lower weekly BB) levels and 1,509 (76.4% FR).

MARKET OUTLOOK

In the midst of the ongoing peak 1Q22 results season and potential further liquidations by foreigners (May:-RM481m, Jan-Apr: +RM7.3bn), Bursa Malaysia is likely to stay volatile (supports: 1,509-1,520-1,530; resistances are 1,552-1,565-1,580), as investors reassess a confluence of lingering risks: (i) punitive inflation, (ii) hawkish Fed, (iii) rising geopolitical tensions in Europe and Asia, (iv) BNM’s rates normalisation (towards 2.5% by end 2022), and (v) economic slowdown.

VIRTUAL PORTFOLIO POSITION-FIG1

We Squared Off EVERGRN (12.1% Loss) Yesterday After Hitting Our Stop Loss Levels.

Source: Hong Leong Investment Bank Research - 26 May 2022