MARKET REVIEW

Asia/US. Most Asian markets slipped after recent upbeat Jan jobs, PMI, retail sales and Feb NAHB housing market index reports coupled with the brisk Jan CPI data ramped up fears of more hawkish moves from the Fed. The Dow plunged 431 pts to 33,697 while the US10YT gained 6 bps to 3.86% following lower weekly jobless claims and higher-than expected Jan PPI (0.7%, forecast: 0.2%) reports raised worries that the Fed will take its monetary policy tightening further. Sentiment was also dampened by Fed officials from James Bullard and Loretta Mester that supported for a larger hike in March FOMC meeting.

Malaysia. In line with lower regional markets, KLCI eased 3.9 pts at 1,484.3 on profit taking after rising 23.6 pts in the last four consecutive days. Despite the decline, market breadth turned positive to 1.31 (1st gain after in the red for the 8th straight session) from 0.96 previously. After disposing RM476m shares from (3-10 Feb), foreign institutions emerged as the major net buyers for a 4th consecutive day (+RM74m, Feb: -RM220m) while local institutions (-RM41m, Feb: +RM81m) and retailers (-RM33m, Feb: +RM139m) turned as net sellers in equities.

TECHNICAL OUTLOOK: KLCI

Following the 23.6-pt bounce in the last four sessions, KLCI fell 3.9 pts to 1,484.2 on profit taking but still a tad above 200D MA (1,479 now). We reiterate that KLCI must stage a decisive breakout above 200D MA and 20D MA (1,488) in order to advance further toward 1,500-1,512-1,528 zones. Conversely, a fall below 200D MA will trigger further selldown at 1,450-1,460 zones.

MARKET OUTLOOK

In the wake of elevated inflation and concerns the Fed may keep interest rates higher for longer to curb stubborn inflation coupled with a weakening RM vs USD to RM4.40 yesterday (4.2% since hitting a low of RM4.22 on 27 Jan), KLCI may be trapped in sideways consolidation (support: 1,460-1,470; resistance: 1,500-1,512) in short term pending clearer leads from the local ongoing results season and the Budget 2023 presentation (24 Feb). Technically, HIBISCS uptrend from RM0.81 (low in Sep 22) remains intact barring a fall below uptrend line support near RM1.07. A strong breakout above RM1.16 hurdle is needed to lift share prices higher at RM1.21-1.32 zones next. A fall below RM1.07 will drag the stock lower at RM1.00-1.05 territory.

Source: Hong Leong Investment Bank Research - 17 Feb 2023