MARKET REVIEW

Asia/US. Asian markets ended mostly higher, bolstered predominantly by China’s swift economic reopening with pro-growth policies from Beijing, dissipating dollar strength and hopes for a pause in interest rate hikes. Overnight, the Dow jumped 205 pts to 33,949 as investors combed through a raft of mixed corporate earnings, better-than-expected US 4Q22 GDP and Dec durable goods orders, ahead of the FOMC decision (1 Feb). On corporate earnings, Tesla and Visa results beat Wall St expectations whilst Intel and Southwest results missed forecasts.

Malaysia. Bucking higher regional markets, KLCI fell as much as 5.4 pts before narrowing the loss to 1.1 pts at 1,498.4 whilst FBM Small Cap and ACE indices jumped 1.1% and 1.06%, respectively. Market breadth (gainers/losers ratio) remained positive at 1.57, a tad lower vs 2.21 a day ago, supported by higher traded volume (+32% to 3.75bn shares) and value (+21% to RM2.03bn), with focus on lower liners and ACE stocks. Foreign institutions (-RM1m, Jan: RM-169m) extended their net outflows for a 5th session, followed by local institutions (-RM14m, +RM650m), while local retailers emerged as the only net buyers (+RM15m, Jan: -RM481m) after net selling RM547m in the past 11 consecutive days.

TECHNICAL OUTLOOK: KLCI

We believe market bulls will have the upper hand in retesting the 1,518-1,528 hurdles as long as the KLCI remains above the uptrend line and major 50D and 200D MA support levels. Conversely, a decisive break below the 1,477-1,486 supports would trigger a selloff towards the 1,454-1,468 zones.

MARKET OUTLOOK

Ahead of the FOMC decision and upcoming 4Q22 results season in Feb coupled with a lack of strong local catalysts, KLCI is likely to drift sideways, given the focus on lower liners and ACE counters. However, we continue to see uptick bias in KLCI to recapture 1,500- 1,512-1,528 resistance levels after a brief consolidation, barring any breakdown below key supports at 1,477 (50D MA) and 1,486 (200D MA) zones, supported by the undemanding KLCI CY2023 valuation (12.6x P/E vs 10Y mean 16.9x), and low foreign shareholding (Dec 2022: 20.6% vs all-time low of 20.1% in Aug). Following the higher lows pattern and a successful breakout above the RM0.70 neckline resistance, WASEONG (HLIB BUY-TP RM0.96) is likely to retest RM0.75-0.82-0.90 territory. Key supports are pegged at RM0.65- 0.67-0.69 zones.

Source: Hong Leong Investment Bank Research - 27 Jan 2023