MARKET REVIEW

Asia/US. MSCI All Countries Asia Pacific index eased 0.15% to 155.34 as investors awaited the key US Aug CPI release last night that could influence the Fed’s tightening policy and the trajectory of global growth. After rallying 1,236 pts in the last four sessions, Dow slid 1,276 pts to 31,105 as a hotter-than-expected US Aug CPI (8.3%, forecast: 8.1%) boosted speculation that the Fed will have to move even more aggressively to tame runaway inflation. While a 75 bps rate hike is broadly expected on 21 Sep FOMC meeting, Fed funds futures are now pointing to an over 30% likelihood (vs 0% a week ago) of a more aggressive 100 basis point hike, fuelling bets that the policy rate could reach 4.25% by end Dec, accelerating the likelihood of a recession in the US economy.

Malaysia. KLCI fell 10.2 pts to 1,487.8 on profit taking following a 4-day winning streak amid heightened speculation that the GE15 is around the corner after PM said t he discussion with UMNO top 5 could be held before tabling Budget 2023 on 7 Oct. Market breadth (gainers/losers) slipped to 0.78 from 1.28 on Monday, supported by 2.64bn shares traded valued at RM1.74bn.

TECHNICAL OUTLOOK: KLCI

KLCI slipped into profit taking consolidation after failing to break above the key downtrend resistance at 1,502. Tracking Wall St rout overnight and a mild breakdown below support trendline, KLCI is expected to resume its selling pressure, revisiting key supports at 1,475 and 1,457 levels. Meanwhile, stiff hurdles are placed at 1,502, 1,512 and 1,527 (200D MA) levels.

MARKET OUTLOOK

In line with an overnight Wall St slump, KLCI may trend lower today to revisit major supports at 1,457-1,475 levels after falling below the support trendline. 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.

VIRTUAL PORTFOLIO (FIG1)

In the wake of weakening technical outlook and ahead of the holiday-shortened week, we had squared off our positions on SCGBHD (4.2% loss), AWC (3.3% loss), FLBHD (12.8% gain), D&O (5.5% gain), CAPITALA (7.4% gain) and SCOMNET (3.4% gain) yesterday.

Source: Hong Leong Investment Bank Research - 14 Sept 2022