MARKET REVIEW

Asia/US. Tracking heavy losses from Wall St, Asian markets fell in early trades amid risk off mood and recession angst following fragile US economic data and hawkish Fed rhetoric. However, most markets recovered some losses due to optimism over a Chinese economic recovery after IMF’s optimism that China could see a strong economic recovery by as early as 2Q23. The Dow slid 253 pts (its 3rd straight slide), soured by disappointing quarterly results (eg P&G, Northern Trust, Charles Schwab) and expectations for the Fed to remain hawkish for longer as the tight labour market shows little sign of abating as weekly jobless claims fell to their lowest level since Sep. Fed Vice Chair insisted the central bank would keep rates “sufficiently restrictive for some time" to ensure inflation returns to 2% target.

Malaysia. Led by a pullback in banking stocks following the unexpected move by BNM to keep OPR unchanged at 2.75%, KLCI ended flat (+0.7-pt 1,496.2) ahead of the long CNY holidays (22-24 Jan). Market breadth (gainers/losers ratio) improved to 1.05 from 0.91 a day ago. Foreign institutions turned net sellers for a 2nd day (-RM72m, Jan: -RM134m) followed by local retailers (-RM47m, Jan: -RM386m), which recorded their net outflows for the ninth consecutive session. Meanwhile, local institutions emerged as net buyers for the eight session out of nine (+RM119m, Jan: +RM520m).

TECHNICAL OUTLOOK: KLCI

As long as KLCI holds up above the support trend line and 200D MA near 1,488, we reckon the bulls will have the upper hand to retest 1,500-1,528 in the short term. Conversely, a decisive break down below the support trend line would trigger a selloff towards 1,454- 1,468 zones.

MARKET OUTLOOK

Tracking an extended bearish mood from Wall St and ahead of the CNY long holidays, KLCI may trend sideways with key supports pegged at 1,468-1,488 whilst resistances are situated near 1,500-1,512-1,528 levels. Technically, any brief profit taking pullback on RGB will be attractive to bargain for rebound upside towards RM0.25-0.28-0.30 zones, while supports near RM0.21-0.22-0.225 will cushions downside.

Source: Hong Leong Investment Bank Research - 20 Jan 2023