MARKET REVIEW

Asia/US. The MSCI All Countries Asia Pacific Index rose 0.29% to end at 170.5 (+2.1% WoW), tracking higher Wall Street, on an optimistic note in anticipation of slowing inflation and less restricted Fed policy, as well as better-than-expected US 4Q22 GDP numbers that raised hopes of a soft landing in the world's largest economy. Ahead of the key US FOMC decision (1 Feb) and Jan economic release (i.e. jobs data, manufacturing, and services PMI), the Dow gained 29 points to 33,978 after swinging between +215 pts and -115 pts as investors digested (1) the easing December PCE deflator (the Fed's preferred proxy for inflation), (2) falling real personal spending, and (3) a slew of mixed 4Q22 earnings prints. Also, the ongoing earnings season will provide further insight into corporate America. AMD, Meta Platforms, Alphabet, Amazon, Apple, and Qualcomm are some of the prominent companies to report.

Malaysia. Despite higher regional markets, the KLCI fell 0.9-pt to 1,497.6 (its 3rd consecutive decline) last Friday, finishing -2.8 pts lower for the holiday-shortened week due to a lack of positive local catalysts. Market breadth (gainers/losers ratio) remained positive at 1.41, a tad lower vs. 1.57 a day ago. The average transaction value of RM0.55 per share (compared to RM0.69 the previous week) reflected the concentration of trading activity on lower liners and ACE stocks. Foreign institutions (-RM31m, Jan: -RM200m) extended their net outflows for a 6th session, followed by local retailers (-RM5m, Jan: -RM486m) whilst local institutions (+RM36m, Jan: +RM686m) emerged as the only net buyers.

TECHNICAL OUTLOOK: KLCI

We believe market bulls will have the upper hand in retesting the 1,500-1,512-1,528 hurdles as long as the KLCI remains above the uptrend line and major 50D (1,477) & 200D MA (1,486) support levels. Conversely, a decisive fall below these 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 February, the KLCI is likely to drift sideways, oscillating within 1,477-1,486 supports and 1,512-1,528 hurdles. While bluechips may continue to lock in a range-bound consolidation amid a lack of fresh catalysts, there will probably be rotational trading interest, particularly among the lower liners and ACE companies, mirroring last week’s trading pattern. Technically, JAG’s shares need sustained strength above RM0.355 (upper BB) to enhance upward momentum towards the RM0.375-0.40 zones, while key supports are pegged at RM0.32-0.33 levels.

Source: Hong Leong Investment Bank Research - 30 Jan 2023