MARKET REVIEW Asia/US. Ahead of the US Sep nonfarm payrolls data tonight, Asian markets ended mixed amid UNCTAD’s warning that aggressive monetary policies in advanced economies risk triggering a global recession and prolonged stagnation. Investors also weighed on rising geopolitical tensions and elevated inflation after North Korea fired a ballistic missile and the

OPEC+ plan to cut oil supply by 2m bpd (consensus 1m). Ahead of the US Sep jobs data, Dow tumbled 347 pts to 29,927 amid inflationary concerns (following recent rebound in oil prices amid OPEC+ aggressive output cut) and continued hawkish commentaries from the Fed officials, pushing back against market bets of a Fed pivot. Meanwhile, Treasuries weakened amid a hawkish Fed and growing inflationary worries, with the 10Y yield jumped 7 bps to 3.82% while the more Fed sensitive 2Y note soared 10 bps to 4.25%.

Malaysia. After surging 26 pts in 3 days, KLCI ended flat on last-minute selldown ahead of the tabling of Budget 2023 today as well as intensifying talks of the dissolution of Parliament soon. Market breadth stayed positive at 1.33, easing from 1.48 a day ago. Foreign investors resumed as major net sellers (-RM72m, Oct: -RM192m, Sep:-RM1.63bn, Aug: +RM1.98bn) together with local retailers (-RM32m, Oct: -RM80m) while domestic institutions registered net buying trades of RM104m (Oct: +RM272m).

TECHNICAL OUTLOOK: KLCI

After rebounding from a low of 1,385 (3 Oct) to intraday high of 1,428 yesterday, KLCI ended flat on last-minute selldown amid speculation that Parliament will be dissolved soon to pave way for GE15. Barring any sharp retreat below 10D MA near 1,409, the i ndex could still trend higher towards 1,436-1.454 levels after a mild sideways consolidation. Key supports remained at 1,363-1,380-1,400 zones.

MARKET OUTLOOK

Tracking overnight retreat from Wall St, profit taking activities may dampen sentiment ahead of the tabling of Budget 2023 today and continued speculation that GE15 would be held soon. Overall, wild swings may prevail in Oct after a 7.8% slide in Sep (resistance: 1,436-1,454-1,468) in wake of jittery market backdrops, driven by (i) higher perceived market risk premium for Malaysia in anticipation of an early GE15, (ii) global recession fears, (iii) elevated inflation, (iv) heightened geopolitical tensions, (v) potential downgrades in Malaysian corporate earnings and GDP and (vi) resumption of foreign net selling.

VIRTUAL PORTFOLIO-FIG1

We Had Squared Off PGF (7.8% Gain) and RAMSSOL (6.8% Loss) Yesterday.

Source: Hong Leong Investment Bank Research - 7 Oct 2022