MARKET REVIEW

Global. MSCI AC Asia Pacific index tumbled 1.6% to 166.16, taking cues from a slide on Wall Street overnight ahead of the crucial US inflation data in the evening. Investors also weighed on resumption of mass virus testing in parts of Beijing and Shanghai despite a lower-than-expected May CPI (2.1%, consensus 2.2%), which bolstered the case for further policy easing. Dow plunged 880 pts to 31.393 while the US 10Y bond yield surged 0.11% to 3.16% amid hotter-than-expected May CPI to a 40Y high at 8.6% (consensus: 8.3%), anchoring expectations for tighter monetary policy. Separately, the preliminary June consumer sentiment index dived to 50.2 pts (May: 58.4, consensus: 58.5), fuelling worries about a looming recession. Attention now turns to the 13-14 June FOMC meeting, exacerbating debate a 0.5% hike might not be enough and a more aggressive 0.75% hike could be in the cards at the upcoming meetings.

Malaysia. Tracking Wall St rout and 6 days of consecutive foreign net outflows, KLCI slid 15.8 pts to 1,494, making it a 7-day losing streak, led by selloff in GENTING, PBBANK, TENAGA, TOPGLOV, MAYBANK and PBBANK. Market breadth (gainers/losers) deteriorated to 0.38 from 0.52 a day before. Foreign institutions’ net selling was heavy at RM183m (5D: -RM446m; YTD: +RM6.96bn), whilst local institutions (+RM92m; 5D: +RM258m; YTD: -RM8.12bn) and retailers (+RM91, 5D: +RM188m; YTD: +RM1.16bn) were the major net buyers.

TECHNICAL OUTLOOK: KLCI

KLCI fell 15.8 pts to 1,494.95 for a 7th consecutive losing streak. Following the 1,500 psychological support breakdown and an extended Wall St slump last Friday, KLCI may tumble further this week towards 1,452-1,475-1,485 zones before staging a potential oversold rebound. Nevertheless, any technical rebound may face stiff resistances near 1507-1,531-1,554 levels.

MARKET OUTLOOK

Tracking Wall St slump and ahead of the widely-focused 13-14 June FOMC meeting, Bursa Malaysia is likely to witness roller coaster ride with key downside supports at 1,452-1,475- 1,485 zones after closing below 1,500. Meanwhile, any technical rebound could face stiff hurdles at 1507-1,531-1,554 due to prevalent turbulences, in the light of (i) elevated inflation, (ii) hawkish Fed, (iii) protracted Russia-Ukraine war, (iv) renewed political fluidity amid speculation of GE15 in 2H22, and (v) a resumption of foreign selling. We continue to approach these dynamics by staying defensive, diversified and patient.

VIRTUAL PORTFOLIO POSITION-FIG1

Last Friday, we squared off GENTING (3.1% loss), HIBISCUS (13.6% loss) and SWIFT (7.4% loss) amid deteriorating technical outlook.

Source: Hong Leong Investment Bank Research - 13 Jun 2022