MARKET REVIEW

Asia/US. The MSCI All Countries Asia Pacific rose 0.6-pt to 170.6, taking cue from a reduced Fed’s rate hike of 25 bps (from 50 bps in Dec) and Powell’s remark that the dis - inflationary process has started. The Dow tumbled as much as 277 pts before paring the losses to 39 pts at 34,053 while gains from Meta along with other mega tech stocks like Apple, Amazon and Alphabet sent the S&P 500 (+1.47% to 4,180) and the Nasdaq 100 (+3.56% to 12,803) to their highest levels since Sep, boosted by Powell’s mildly dovish post FOMC remarks. After the bell, the US Tech 100 futures retreated 1.3% as Apple and Alphabet results missed consensus while Amazon provided a cautious guidance.

Malaysia. Tracking the mild gains in Asian markets, KLCI rose 4.3 pts following a 5D cumulative decline of 14.8 pts, led by bargain hunting on DIGI, PMETAL, SIMEPLT, TENAGA, MAXIS and PETGAS. Market breadth (gainers/losers ratio) jumped to 2.0 from 0.52 previously, supported by a 28% and 6% hikes in daily trading volume at 5.14bn shares worth RM2.95bn amid buoyant buying interests on small, midcap and lower liners. Foreign institutions (+RM36m) were the biggest net buyers after witnessing 8D of net outflows (- RM400m) followed by local institutions (+RM0.5m) whilst retailers (-RM36m) resumed their net selling positions after enjoying 2D of net buying valued at RM79m.

TECHNICAL OUTLOOK: KLCI

Following the breakdown below the major support trendline from 1,373, KLCI near term uptrend could be temporary disrupted. A decisive close further below 200D MA (1,486) could drive the benchmark lower to retest 1,451-1,468-1,479 zones. Only a successful reclaim above the support trendline will reignite a rally towards 1,512-1,528 zones.

MARKET OUTLOOK

Although KLCI near term outlook remains positive amid China reopening and near peaking interest rate upcycle, we expect the benchmark to trend range bound (resistance: 1,500- 1,512-1,528, supports: 1,451-1,468-1,479) ahead of the long weekend holidays (Thaipusam: 5 Feb), in the absence of fresh local catalysts and a technical support trendline breakdown, with key focus on Feb results season and the re-tabling of Budget 2023.

Source: Hong Leong Investment Bank Research - 3 Feb 2023