MARKET REVIEW

Asia/US. Asian markets ended mixed after struggling for traction as investors weighed Powell’s remarks signalling that more rate hikes will likely be needed if the jobs market remains strong, but maintained that disinflation has begun. The Dow tumbled 206 pts at 33,949 as investors weighed on a litany of hawkish rhetoric from Fed officials Christopher Waller, Neel Kashkari and John Williams, reinforcing the idea that more rate hikes will be needed to quash elevated inflation.

Malaysia. KLCI recorded its 2nd day of decline, falling 5.6 pts to 1,470.8, led by major selldown in banking stocks in anticipation of softening macroeconomic outlook, peaking OPR hikes and a potential widening FFR-OPR spread. Market breadth (gainers/losers ratio) improved slightly to 0.65 from 0.41 the previous day, whilst daily trading volume fell 25% to 3.94bn shares worth RM2.51bn as selling frenzy subsided. Foreign institutions resumed their net outflows for a third session (-RM55m, Feb: -RM309m), followed by local institutions (-RM2m, Feb: +RM146m), with local retailers emerged as the largest net buyers for a 2nd day (+RM57m, Feb: +RM163m).

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 200D MA (1,483) and 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 levels whilst upside hurdles are pegged at 1,483-1,500- 1,512. Key events to watch out for Feb: 4Q22 results season, Malaysia’s 4Q GDP (10 Feb), re-tabling of Budget 2023 (24 Feb), and upcoming Parliament sitting (13 Feb-30 Mar).

VIRTUAL PORTFOLIO (FIG1)

We had squared off our positions on MYNEWS (2.9% loss) and MAHSING (6.9% gain) yesterday.

Source: Hong Leong Investment Bank Research - 9 Feb 2023