MARKET REVIEW

Asia/US. Mirroring the overnight wild swings on Wall St, Asian markets ended mixed as investors await Powell’s speech in the evening for additional economic and policy clues following last Friday’s red-hot US January nonfarm payroll and strong US ISM services data. The Dow rallied 265 pts at 34,156 (from -257 pts intraday) and the US 10Y yield rose 3 bps to 3.67% as investors digested Powell's remarks at the Economic Club of Washington. He reiterated the disinflationary process has begun but cautioned that surprisingly strong economic data may need for more rate hikes in what will likely be a long drawn-out battle against inflation.

Malaysia. KLCI fell 14.1 pts to 1,476.4 in the wake of persistent foreigners’ net withdrawals, renewed weakness in RM (vs USD) and expectations of a widening FFR-OPR spread following a blockbuster US January nonfarm payroll. Market breadth (gainers/losers ratio) slid to 0.41 from 0.87 last Friday, whilst daily trading volume surged 20% at 5.24bn shares worth RM3.03, mainly led by heavy selldown of MYEG price to a 26M low. Local retailers emerged as the biggest net buyers (+RM135m, Feb: +RM106m), followed by local institutions (6th consecutive days of net buying, +RM86m, Feb: +RM148m) while foreign institutions continued their net outflows (-RM221m, Feb:-RM254m).

TECHNICAL OUTLOOK: KLCI

KLCI's near-term uptrend has come to an end as a result of a clear breakdown below the key support trendline (from 1,373) and the 20D/50D/200D MA levels. This may prompt a further selldown into lower supports at the 1,430-1,450-1,468 zones. On the other hand, a continuation of the rally to retest the 1,512-1,528 zones will only happen upon a successful recapture above the support trendline.

MARKET OUTLOOK

Following a sharp retreat below the uptrend line support and 200D MA (1,483) coupled with the lack of fresh catalysts, KLCI is likely to extend its consolidation mode with major supports near 1,430-1,450-1,468 whilst upside hurdles are pegged at 1,483-1,500-1,512. Key events to watch out for Feb: Ongoing 4Q22 results season, Malaysia’s 4Q GDP (10 Feb), re-tabling of Budget 2023 (24 Feb), and upcoming Parliament sitting (13 Feb-30 Mar). Technically, HARTA will extend its sideways consolidation with key supports at RM1.46- 1.50-1.53 levels. The stock needs to overcome stiff barriers near RM1.64-1.68 to move higher toward RM1.74 territory.

Source: Hong Leong Investment Bank Research - 8 Feb 2023