MARKET REVIEW

Asia/US. After tumbling 5% in the last five sessions, MSCI All Countries Asia Pacific index recorded its 2nd day of technical rebound last Friday, rising 1.45% to 154.3 (-0.05-pt WoW) as investors took Powell’s hawkish comments in stride, with traders have already priced in another supersized 75bps hike (i.e. FFR: 3.25%) on 20-21 Sep meeting, and smaller hikes of 50bps and 25bps in the Nov (3.75%) and Dec (4.00%) meetings, respectively. Dow surged 377 pts at 32,152 to record a 3rd straight gain and ended the week 2.7% higher, snapping a three-week losing streak. Perceived risk-on mood continues from deeply oversold conditions and depressed sentiment in anticipation of easing Aug CPI print (14 Sep), overshadowing the chorus of hawkish Fed remarks and ECB latest policy statement.

Malaysia. In sync with strong recovery from Wall St, a resumption of buying interest from foreign institutions (after net outflows in the last four days), coupled with a penchant for financial stocks following the 25 bps OPR hike, KLCI rose 1.8 pts to record its 3rd

consecutive gain (+5.3 pts WoW). Market breadth (gainers/losers) rebounded further to 1.36 from 1.12 a day ago.

TECHNICAL OUTLOOK: KLCI

After rallying from 26M low at 1,408 (14 July) to a high of a 1,528 (17 Aug), KLCI fell to a low of 1,465 (25 Aug) before ascending gradually to end at 1,496.5 last Friday. Tracking Wall St relief rally, KLCI is poised for a triangle breakout soon. A successful breakout above immediate downtrend resistance near 1,503 is likely to lift the index to 1,527 (200D MA) and 1,555 (100W MA) hurdles next. Conversely, a fall below uptrend line support near 1,487 may witness further pullback toward 1,455-1,475 zones.

MARKET OUTLOOK

In line with the Wall St relief rally, KLCI may retake the critical 1,503 or downtrend line resistance (from 1,615) in this holiday-shortened week (Malaysia day holiday: 16 Sep). A successful breakout may spur greater upside towards 1,527 (200D MA) levels. Conversely, a fall below uptrend line support near 1,487 may witness further pullback toward 1,455- 1,475 zones. Overall, cautious sentiment prevails as investors await the tabling of Budget 2023 (7 Oct) and timing of GE15, as well as lingering risks such as elevated inflation, rising interest rates, weakening RM, government’s economic rationalization measures, global economic slowdown and escalating geopolitical tensions.

Source: Hong Leong Investment Bank Research - 12 Sept 2022