MARKET REVIEW

Asia/US. Tracking higher Wall St, MSCI All Countries Asia Pacific index added 0.82% to 155.57 in quiet trades (China, Hong Kong and South Korea markets were closed for holidays) due to improved risk sentiment. Overall, investors have already priced in another supersized 75bps hike (i.e. FFR: 3.25%) on 20-21 Sep FOMC meeting, and smaller hikes of 50bps and 25bps in the Nov (3.75%) and Dec (4.00%) meetings, respectively, betting that inflation has peaked and may moderate further in the coming months. In anticipation of an easing CPI print for Aug (8.1%, July 8.5%), Dow jumped 229 pts at 32,381 to record a 4th straight gain, boosted by falling US consumer inflation expectations for the year ahead to 5.7% in in Aug (July: 6.2%; June: 6.8%).

Malaysia. In sync with strong recovery from Wall St and a resumption of buying interest from foreign institutions for a 2nd consecutive sessions, KLCI recorded its 4th day of winning streak (+1.4 pts to 1,498), led by SIMEPLT, HLBANK, IOICORP, IHH, CIMB, PETDAG and HARTA. Market breadth (gainers/losers) remained positive at 1.28 from 1.36 last Friday, supported by higher trading volume and value by 11% and 5% to 2.63bn shares valued at RM1.55bn, respectively.

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 1,498. 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), followed by a stiffer 1,555 (100W MA) hurdle next. Conversely, a fall below uptrend line support near 1,487 may trigger more weakness toward 1,455-1,475 zones

MARKET OUTLOOK

In line with the Dow’s 4th day winning streak due to moderating inflation expectations, KLCI is poised to retake the critical 1,502 (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.

VIRTUAL PORTFOLIO (FIG1)

Ahead of the holiday-shortened week, we took profit on MYNEWS yesterday (12.2% return).

Source: Hong Leong Investment Bank Research - 13 Sept 2022