MARKET REVIEW

Asia/US. Ahead of the Fed (1 Feb), ECB (2 Feb) and BOE (2 Feb) policy decisions coupled with US Jan payrolls (3 Feb), Asia market ended mixed after last week’s rally driven by China’s rapid reopening measures and expectations of a slower pace of central banks’ policy tightening worldwide. Sentiment was also dampened by Biden administration reportedly secured a deal with the Netherlands and Japan to restrict exports of lithography systems made by ASML and Nikon. After surging 934 pts in six straight sessions, the Dow slid 261 pts to 33,717 as investors await the major FOMC decision (1 Feb) and Jan economic release (i.e. jobs data, manufacturing, and services PMI). 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. Following a 3-day losing streak, KLCI inched up 1.8 pts at the eleventh hour to 1,499.4, mainly lifted by gains in PETGAS, MAYBANK, COMB, PBBANK, MAXIS, DIGI and HLBANK. Market breadth (gainers/losers ratio) remained positive but reduced to 1.01 vs 1.41 last Friday following profit taking on small, midcap and ACE stocks. Foreign institutions (-RM49m, Jan: -RM249m) extended their net outflows for a 7th session, whilst local institutions (+RM10m, Jan: +RM696m) and retailers (+RM39m, Jan: -RM447m) emerged as 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 (1,478) & 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 major central banks’ policy outlook and upcoming 4Q22 results season in Feb, KLCI is likely to drift sideways, oscillating within 1,478-1,486 supports and 1,512-1,528 hurdles. We expect blue chips to maintain a range-bound trend amid a lack of fresh catalysts while trading interests will probably be focused on the small, midcap and ACE stocks.

VIRTUAL PORTFOLIO (FIG1)

We took profit on FLBHD (17.1% gain) and FOCUSP (17.8% gain) yesterday.

Source: Hong Leong Investment Bank Research - 31 Jan 2023