MARKET REVIEW Asia/US. Ahead of the key US CPI print and UK’s Friday deadline for the BOE to end monetary support for the bond market, Asian markets ended lower amid Fed’s unequivocal hawkishness, mounting risks of global recession and a resurgence of Covid -19 outbreaks in China. The Dow plunged 549 pts in early trades following a hotter-than-expected Sep CPI, cementing Fed’s aggressive rate hikes stance when it meets on 2 Nov. However, the benchmark staged a strong oversold rebound to end +828 pts at 30,038, driven by bargain hunting and possible short-covering activities, as sentiment was boosted by upbeat results from JP Morgan, BlackRock and Delta Airlines.

Malaysia. In line with regional markets’ rout and persistent foreign selling spree amid multiple external headwinds coupled with GE15 uncertainties, KLCI slipped 7.2 pts to 1,373.4, recording its 5th straight decline. Foreign investors logged net outflows of RM154m (Oct: -RM712m, Sep:-RM1.63bn, Aug: +RM1.98bn) while domestic institutions (+RM132m, Oct: +RM656m, Sep:+RM1.17bn, Aug: -RM2.11bn ) together with local retailers (+RM22m, Oct: +RM56m, Sep:+RM452m, Aug: +RM141m) were the major net buyers.

TECHNICAL OUTLOOK: KLCI

Tracking a prolonged consolidation on Wall St and higher market risk premium perceived for Malaysia following the dissolution of Parliament, KLCI fell 7.2 pts at 1,373.4 (5th consecutive loss). 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 near 1,400-1,418-1,436 levels.

MARKET OUTLOOK

The overnight relief rally from Wall St may boost local bourse today after recording a 47.2- pt slide in five days. However, any technical rebound is likely to be capped near stiff hurdles at 1,400-1,418-1,436 (supports: 1,334-1,348-1,363), as investors weigh on EC’s announcement on 20 Oct pertaining to the important GE15 nomination and polling dates, ongoing US 3Q22 results season, heightened geopolitical tensions in Russia-Ukraine and China Party Congress on 16 Oct. 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 - 14 Oct 2022