MARKET REVIEW

Asia/US. Ahead of the key US CPI data and FOMC decision, Asian markets ended mixed as investors parsed through the implications of surging Covid cases in China against the roll-back of strict Covid rules. After rallying as much as 707 pts following a softer-than expected Nov CPI data (7.1%, forecast 7.3%), the Dow erased most of the gains to end 103 pts higher at 34,108 ahead of the FOMC decision tomorrow (15 Dec at 2am). Meanwhile, expectations that the Fed could pause sooner rather than later pushed 10Y Treasury yield sharply lower by 11 bps to 3.5%.

Malaysia. In line with cautious regional markets and relentless foreign net outflows, KLCI lost 4.3 pts to 1,470.1, mainly led by selling pressures in SIMEPLT, AXIATA, PMETAL, IOICORP and TOPGLOV. Foreigners were the major sellers for the 11th out of past 12 sessions but on a moderating scale (-RM36m; Dec: -RM1.03bn) whilst local institutions (+RM20m; Dec: +RM1.09bn) and retailers (+RM16m; Dec: -RM54m) were the major net buyers.

TECHNICAL OUTLOOK: KLCI

In the near term, we reiterate that KLCI’s uptrend remains intact barring any decisive breakdown below the support trend line from 2Y low of 1,373 (now near 1,460 territory). Key supports are pegged at 1,436-1,454 whilst resistances are situated near 1,482-1,502- 1,528 zones.

MARKET OUTLOOK

The local market should trade sideways as investors look forward for more reform policies from the unity government, the FOMC and ECB decisions coupled with a vote of confidence on the PM when Parliament convenes on 19 Dec. However, downside risk (support: 1,436-1,454; resistance: 1,482-1,502) is limited due to i) further relaxations of China’s zero Covid curbs, ii) expectations of slower rate hike in future, iii) Bursa’s undemanding valuation (13x CY23 P/E against 10Y mean 16x), iv) strengthening political stability as a coalition agreement involving all parties in the unity Government will be signed soon, and v) expectations of year-end window dressing in Dec (10Y/20Y: +2.6%/2.8%). Ahead of its 3QFY1/23 results tomorrow, *ASTRO* could trend higher to the RM0.735-0.78 upside targets with major hurdle capped at RM0.85 (200D MA) after closing above multiple key MAs. Meanwhile, downside is cushioned near RM0.68-0.70 levels.

Source: Hong Leong Investment Bank Research - 14 Dec 2022