MARKET REVIEW

Asia/US. Ahead of the US key Sep CPI data tonight, Asian markets ended mixed as investors weighed: (i) IMF’s sober outlook on global economy, (ii) heightened Russia Ukraine geopolitical tensions, (iii) US’ new export rules to Chinese chip companies and (iv) China’s upbeat loans growth and auto sales in Sep. In wake of the start of the US’ earnings season (JP Morgan, Citigroup, Morgan Stanley, PepsiCo, TSMC, United Health) this week, Dow surrendered an early 216-pt gain to close -28 pts at 29,211 following a higher-than expected Sep PPI print at 0.4% (forecast: 0.2%). Investors also assessed the Sep FOMC minutes where the Fed reiterated interest rates to remain elevated for some time, and policy makers will continue to hike rates until they see clear signs of slowing inflation.

Malaysia. In line with wilds swings on Wall St and regional markets amid multiple headwinds coupled with GE15 uncertainties, KLCI fell 6.3 pts to 1,380.6, registering its 4th

straight losses, led by major selldown in selected heavyweights eg AXIATA, IHH, MRDIY, DIGI, SIMEPLT, DIGI and PMETAL. Market breadth Foreign investors logged net outflows of RM86m (Oct: -RM560m, Sep:-RM1.63bn, Aug: +RM1.98bn) while domestic institutions (+RM42m, Oct: +RM530m, Sep:+RM1.17bn, Aug: -RM2.11bn ) together with local retailers (+RM42m, Oct: RM30m, Sep:+RM452m, Aug: +RM141m) were the major net buyers.

TECHNICAL OUTLOOK: KLCI

After rebounding from a low of 1,385 (3 Oct) to intraday high of 1,428 (6 Oct), KLCI ended - 6.3 pts at 1,380.6 amid GE15 jitters and external headwinds. We expect further downward consolidation in the short term, with key supports pegged at 1,334-1,348-1,363 zones. Any residual strength from an oversold rebound is likely to be capped nearby 1,400-1,424-1,454 levels.

MARKET OUTLOOK

Tracking a prolonged consolidation on Wall St and higher market risk premium perceived for Malaysia following the dissolution of Parliament, KLCI is likely to extend trading with downward bias (resistance: 1,404-1,430-1,454; supports: 1,334-1,348-1,363), driven by (i) global recession fears, (ii) elevated inflation, (iii) heightened geopolitical tensions, (iv) potential downgrades in Malaysian corporate earnings and GDP, along with (v) resumption of foreign net selling. We continue to advocate investors to seek refuge in banks, telcos, utilities, consumer, healthcare, autos and construction stocks as we believe the new government after GE15 will continue to be highly supportive of domestic consumption.

Source: Hong Leong Investment Bank Research - 13 Oct 2022