MARKET REVIEW

Asia/US. Asian markets rebounded in early trades, boosted by the BOE’s decision to buy long-dated government bonds to stabilize its financial markets. However, the gains were trimmed amid a weak opening from the European markets as narrative of inflation, spiking interest rates and recession fears continued to haunt sentiment. The Dow surrendered most of the 548-pt rally on 28 Sep to end -458 pts at 29,225 overnight (-21% from all-time high 36,952) as investors digest fresh hawkish rhetoric from Fed officials that the central bank will not back down from additional rate hikes in the coming months. Meanwhile, better-than-expected 2Q core PCE and personal consumption numbers coupled with lower weekly jobless claims (lowest since April) also paved the path for the Fed to stay aggressive.

Malaysia. In line with the mixed regional markets, KLCI surrendered its early 8.9-pt gain to finish -4.4 pts at 1,397.5 (7th day losing streak) following persistent foreign net selling (- RM1.45bn in 12th straight session) and higher perceived market risk premium for Malaysia in anticipation of an early GE15. Market breadth remained bearish at 0.69, albeit recovering from 0.36 a day earlier.

TECHNICAL OUTLOOK: KLCI

The bears are in total control after breaking below multiple crucial supports to record its 11th decline out of 12 trading days. Following the violation of 1,400 psychological support and Wall St rout, KLCI could extend its downward consolidation towards our envisaged 1,380 (123.6% FR) and 1,363 (138.2% FR) territory soon. Conversely, any oversold bounce may take place next with key resistances near 1,436-1,454-1,468 zones.

MARKET OUTLOOK

After violating crucial 1,400 support to end at 1,397.5 levels yesterday, KLCI could extend its downward consolidation towards our envisaged 1,380 and 1,363 levels due to lingering headwinds including: (i) global recession fears, (ii) central banks’ hawkish tone, (iii) geopolitical tensions, (iv) sliding RM (vs USD, 11.4% YTD to 4.64) and 10Y MGS yield (+0.83% to 4.43%), (v) GE15 fluidity, and (vi) fierce foreign net selling in Sep (-RM1.54bn, Aug: +RM1.98bn). Meanwhile, a minor bounce may take place amid a grossly oversold region (-13.8% from YTD high) but could face stiff barriers at 1,436-1,454-1,468 territory.

VIRTUAL PORTFOLIO-FIG1

We had squared off KOSSAN (1% gain), ASTRO (7.1% loss) and MRDIY (4.8% loss) yesterday Amid Bearish Sentiment.

Source: Hong Leong Investment Bank Research - 30 Sept 2022