MARKET REVIEW

Asia/US. Tracking overnight Wall St retracement, Asian markets ended slightly lower as investors assessed the risk of recession in China and the Fed’s minutes signalling ongoing interest-rate hikes although at a slower pace. On top of that, market sentiment was weighed by the worsening China real estate outlook following bearish guidance from Country Garden Holdings. Overnight, Dow and Nasdaq ended flat at 33.9k (+19.72 pts or +0.06%) and 12.9k (+27.2pts or +0.21%), respectively. Investors were still assessing Wednesday’s minutes from the Fed July meeting, which saw a less aggressive stance by the central bank but without clear hint at the pace of rate hike. As the result, volume on U.S exchange was the lowest for the year so far, at 9.43bn shares. Key focus now will be the upcoming Jackson Hole symposium, which is slated to be held on 25th-27th August.

Malaysia: Tracking regional lacklustre regional markets, KLCI ended -1.54pts to 1516 after fluctuating within 1514-1522 levels. Most banks ended higher yesterday but were offset by the strong selling pressure in some heavyweights such as MISC, Tenaga, TM, and DIGI. Market breadth (gainers/losers) fell to 0.74 from 0.89 a day ago, with daily volume and value eased by 7.7% at 2.51bn shares valued at RM1.95bn.

TECHNICAL OUTLOOK: KLCI

Taking cue from the confirmed shooting star pattern with stiff resistance situated at 1,531 level (200D MA), we reckon a healthy pullback is on the card. However, any downside should be cushioned at an immediate support of 1,491-1,504 levels (10D/20D MA). On the flip side, a successful breakout above 1,531 may lift the benchmark to a more formidable resistance at 1,566 (76.4% FR) levels.

MARKET OUTLOOK

After rallying from a low of 1,408 to a high of 1,527, KLCI may continue its sideways consolidation (supports: 1,490-1,500; resistances: 1,530-1,550), considering the shooting stars pattern and weakening indicators. In addition, market sentiment is expected to stay in cautious mode as investors mull the ongoing Aug reporting season (to gauge how the labour shortage, rising raw material costs, higher minimum wage and supply chain issues affect corporate earnings), a cautious Malaysia 4Q22 GDP outlook (i.e. rising interest rates, economic rationalisation measures, global economic slowdown), speculation of GE15 in 4Q22, as well as escalating US-China tensions.

Source: Hong Leong Investment Bank Research - 19 Aug 2022