MARKET REVIEW Asia/US. Asian markets ended higher amid Wall Street rally overnight due to solid earnings reports and the reversal of planned tax cuts in the UK. However, concerns over a rapid slowdown in the China economy continued to weigh sentiment after the National Bureau of Statistics delayed a slew of economic releases for the 3Q22 and President Xi signalled the commitment of its strict zero-COVID policy. The Dow surged 338 pts (off intraday high +657 pts) to 30,524 in a choppy trade as investors took solace from a solid start to 3Q22 earnings season. On the data front, homebuilder sentiment index weakened more than expected in Oct (fell for the 10th straight month to 38) whilst the Sep industrial production rose better-than-expected in Sep (+0.4%, forecast: +0.1%). Meanwhile, Nasdaq futures jumped as an upbeat Netflix results (reported after regular trading) lifted tech gains.

Malaysia. Tracking higher regional markets and bullish US Dow futures in the afternoon, KLCI rallied 14.1 pts to finish at 1,400.4 (3rd consecutive gain), underpinned by a resumption of foreign buying totalling RM103m (local institutions: -RM106m; retailers: +RM3m) after net selling RM811m in the last 8 sessions. Market breadth rebounded to 2.08 from 0.82 a day ago whilst daily volume and value soared 21% and 15% to 2.4bn shares valued at RM1.71bn, respectively.

TECHNICAL OUTLOOK: KLCI

After sliding 15.3% from YTD high of 1,620 to a low of 1,373, KLCI is creeping upward to end higher at 1,400.3 yesterday, taking cues from improving risk sentiment on strong recoveries in the US and UK markets. As technical indicators are on the mend and a close above 10D MA, KLCI could stage further residual rebound towards formidable barriers near 1,408-1,436-1,454 levels. Conversely, key supports are pegged at 1,348-1,363-1,380 zones.

MARKET OUTLOOK

Overnight Wall St rally may provide positive spillover for the local bourse today to advance further towards our envisaged 1,410-1,420 hurdles (support: 1,348-1,363-1,380). Meanwhile, AFFIN’s proposed special DPS of 18.09sen (10.85sen in cash; balance 7.24sen electable) and interim DPS of 4.53sen (fully electable) will collectively translate to a yield of 11.2% (special 9.0%; interim 2.2%), boosting share price in the short term. Technically, AFFIN is poised to retest the RM2.08-2.20 resistance levels, underpinned by the bullish technical readings whilst strong supports are pegged near RM1.94-1.98 levels.

Source: Hong Leong Investment Bank Research - 19 Oct 2022