MARKET REVIEW

Asia/US. Led by technical rebounds in China, Taiwan and Japan markets after Pelosi wrapped up her landmark visit to Taiwan, most Asian bourses ended higher last Friday as investors shrugged off China’s military drills and hawkish comments by several Fed officials. Dow tumbled as much as 238 pts before ending 76 pts higher at 32,803 (-42 pts WoW) as an upbeat July non-farm payrolls (+528k, forecast 250k) dampened optimism over an imminent Fed pivot, bolstering the case for further ultra-aggressive 0.75% rate hike (during 21-22 Sep FOMC meeting) and banking stocks amid spiking bond yields.

Malaysia: Bucking mostly higher regional markets and ahead of the key US July non-farm jobs data, KLCI fell 6.15 pts as investors took profit on selected heavyweights such as PMETAL, MRDIY, PCHEM, PETGAD, PBBANK and PETDAG. Market breadth (gainers/losers) slipped to 0.94 from 2.21 a day ago whilst turnover declined slightly to 2.61bn RM1.62bn from 2.65bn shares worth RM1.89bn on Thursday.

TECHNICAL OUTLOOK: KLCI

After skyrocketing almost 100 pts from 2Y low of 1,408 (14 July) to a high of 1507, KLCI succumbed to profit taking, ending -6.2 pts at 1,501.6 (+9.3 pts WoW) last Friday. Barring any deep pullback below 1,475-1,483 supports, the rally from 1,408 may continue to revisit 1,512 (50% FR), 1,525 (100D MA) and 1,536 (61.8% FR) next after a brief consolidation. Conversely, a breakdown below the key supports may trigger further retracements toward 1,428-1,457 levels.

MARKET OUTLOOK

After rallying 94 pts from 2Y low of 1,408 (14 July) to 1,501.6 last Friday, KLCI could take a breather as we brace for the ongoing Aug reporting season and the latest update on US July CPI this Wednesday (forecast: 8.7%; June: 9.1%). Meanwhile, expectations of a slower 2H22 GDP growth in Malaysia amid looming US recession and a stumbling growth in China, speculation of an early GE15 before Dec 2022 as well as rising US-China tensions may continue to dampen sentiment, capping upside near 1,512-1,525-1,536 zones.

Source: Hong Leong Investment Bank Research - 8 Aug 2022