MARKET REVIEW

Asia/US. Ahead of the major US Jan CPI (14 Feb) and PPI (16 Feb) data that could provide fresh clues about the trajectory of Fed’s rate hikes, MSCI All Countries Asia Pacific index inched up 0.39% to 165.79 in cautions mood, in tandem with overnight gains from Wall St. The Dow tumbled as much as 419 pts following a hotter-than-expected Jan CPI data (6.4%. forecast: 6.2%) but paring its losses to -157 pts at 34,089 while the US10YT gained 4 bps to 3.74% as investors digested different views from Fed officials. Fed President Patrick Harker said the central bank was “likely close” to reaching restrictive enough rates while Fed John Williams noted that the progress in inflation is still above the target of 2% and the Fed will need to keep raising rates to tame sticky inflation.

Malaysia. In line with the higher Wall St and regional markets, KLCI rose 8.8 pts to 1,484 (its 3rd straight gain), led by bargain hunting on DIGI, IOICORP, PETGAS, PMETAL, PCHEM and SIMEPLT. Market breadth (gainers/losers ratio) was in the red for the 7th

straight session but at vastly improved to 0.99 vs 0.70 previously while daily trading volume shrank 13% to 3.2bn shares worth RM2.16bn. After disposing RM476m shares from (3-10 Feb), foreign institutions emerged as the major net buyers for a 2nd day (+RM3m, Feb: - RM397m) followed by local institutions (+RM16m, Feb: +RM175m) while local retailers turned net sellers (-RM19m, Feb: +RM222m) after net buying RM277m shares in the last 6th session.

TECHNICAL OUTLOOK: KLCI

Following the 19.3-pt bounce in the last three sessions and closed a tad above 200D MA at 1,484 yesterday, KLCI is likely to retest the next hurdles near 1,488 (20D MA) and 1,500 psychological levels, as technical are on the mend. A successful rebound above these levels may lift the benchmark toward 1,512-1,528 territory. Conversely, a fall below 200D MA or 1,480 levels will witness the index to revisit 1,450-1,460 zones.

MARKET OUTLOOK

Tracking overnight Wall St’s cautious tone amid elevated inflation and the possibility of higher and longer Fed rate hikes, KLCI is likely to be trapped in sideways consolidation in short term with stiff resistance near 1,500-1,512 levels whilst key support levels are pegged at 1,450-1,463. Technically, ANCOMNY (HLIB BUY-RM1.73 TP) share price may trend higher towards RM1.36-1.40-1.48 levels following the rounding bottom formation while key supports are pegged at RM1.14-1.20. 

Source: Hong Leong Investment Bank Research - 15 Feb 2023