MARKET REVIEW

Asia/US. Ahead of the major US Jan CPI (14 Feb) and PPI (16 Feb) data, MSCI All Countries Asia Pacific index slid 0.7% at 165.17, as investors assessed recent drumbeat of hawkish comments from Fed officials which indicated the central bank may need to hike rates higher than forecasted red-hot jobs data. Despite Fed Governor Michelle Bowman’s remark that interest rates would need to keep rising to tame inflation, the Dow rebounded for a 2nd day (+377 pts to 34,246) while the US10YT eased 3 bps to 3.71%, ahead of the closely watched CPI (tonight) and Thursday’s PPI readings for hints about the economy and to assess what the Fed may do next. On corporate front, Coca-Cola, Airbnb, Marriott International, Analog Devices, Shopify, and Cisco Systems, are among the companies that have their earnings reports due this week.

Malaysia. In line with the mixed regional markets, KLCI inched up 0.6-pt at 1,475.2 after oscillating within a tight 1,469.3-1,475.2 band. Market breadth (gainers/losers ratio) was in the red for the 6th straight session at 0.70 vs 0.75 last Friday while daily trading volume shrank 9.3% to 3.7bn shares worth RM2.05bn. After disposing RM476m shares in the last six consecutive sessions, foreign institutions emerged as the major net buyers (+RM41m, Feb: -RM400m) followed by local retailers (+RM7m, Feb: +RM241m) while local institutions turned net sellers (-RM48m, Feb: +RM159m).  

TECHNICAL OUTLOOK: KLCI

The bears are in control now as a result of a clear KLCI breakdown below the key support trendline (from 1,373) and the 20D/50D/200D MA levels. Unless staging a successful rebound above 1,481 (200D MA) and 1,489 (mid BB) hurdles, KLCI could still face the risk of falling into lower supports at the 1,430-1,450 zones. A successful breakout above 1,481- 1,489 barriers will spur greater upside towards 1,500-1,512-1,528 territory.

MARKET OUTLOOK

Barring a strong breakout above 1,481-1,489 hurdles, KLCI is likely to trap in sideways consolidation in the short term with stiff resistance near 1,500-1,512 levels. Key events to watch out: US CPI and PPI data, US-China diplomatic standoff amid recent escalating aerial dramas, ongoing 4Q22 results season, persistent selling by foreign investors (YTD: - RM748m), and the re-tabling of Budget 2023 (24 Feb).

VIRTUAL PORTFOLIO (FIG1)

Due to the market uncertainty and lack of fresh catalysts, we had squared off UEMS (3.7% loss) and CAPITALA (0% gain) yesterday.

Source: Hong Leong Investment Bank Research - 14 Feb 2023