MARKET REVIEW

Asia/US. Ahead of Powell’s high profile speech at the Jackson Hole symposium, MSCI All Countries Asia Pacific index ended +0.22% at 160.6 as investors mulled latest China’s 1 trillion yuan worth of stimulus measures to kick-start its economy from Covid disruptions, property sector slump and power shortages. Heightened risks of capital outflows also plagued on sentiment amid PBOC’s dovish bias against global central banks’ hawkish policies to combat inflation. Dow dived 3% or 1,008 pts to 32,283 last Friday, driven by a meltdown in tech after Powell signalled that higher for longer interest rates would be needed to rein in inflation even if that results in a “sustained period of below-trend growth.” Overall, Powell’s hawkish missive dashed hopes of a near-term policy pivot, despite moderating signs that price pressures, reflected by an easing July core PCE deflator (4.6%; June: 4.8%).

Malaysia. Following a 6-day losing streak of 51.5 pts and a resumption of foreign net buying, KLCI rose for a 2nd day to end +4.8 pts at 1,500.3 (-4.2 pts WoW). Sentiment remained edgy (gainers/losers: 376/449) as investors assessed China’s plans to implement more measures to stabilize its economy, while awaited more clarity from Powell’s speech during the Jackson Hole forum.

TECHNICAL OUTLOOK: KLCI

KLCI jumped 4.8 pts at 1,500.3 to record its 2nd consecutive gain after plunging 51.5 pts in six days. However, following Dow’s rout last Friday and a negative shooting star candlestick, KLCI could face further pullback this week, with major hurdles pegged at 1,514 (downtrend line from 1,615) and formidable resistance near 1,529 (200D MA) levels. Key supports are pegged at 1,466-1,475-1,482 zones.

MARKET OUTLOOK

Tracking last Friday’s Wall St slide and a holiday-shortened week (Merdeka day holiday: 31 Aug), KLCI is expected to remain choppy (support: 1,460-1,480; resistance: 1,515-1,530) as investors weigh the possibility of paucity of Malaysia’s corporate earnings and GDP growth in 2H22 (amid elevated inflation, rising interest rates government’s economic rationalization measures and global economic slowdown etc.), GE15 risk, as well as escalating US-China tensions.

Source: Hong Leong Investment Bank Research - 29 Aug 2022