Asia/US. Ahead of the US Jan PCE deflator data (24 Feb) and the Feb FOMC minutes (22 Feb), Asian markets ended mixed as investors weighed the prospects for a steeper Fed tightening cycle to combat sticky inflation against China's improved economic and corporate outlook following its exit from the zero-covid. The Dow plunged 2.06% to 33,129 as sentiment was dampened by gloomy outlook guidance by Walmart and Home Depot, rising US-China tensions, as well as worries that stubborn inflation will lead to prolong rate hikes, which could tip the US economy into a hard landing. Meanwhile, better-than-expected US Jan PMI would support the case for more restrictive Fed policy path, driving the US 10Y yield +14 bps to 3.95%.
Malaysia. Tracking regional markets, the KLCI ended flat (+0.5-pt at 1,474) after ranging between 1,471.9 and 1,477.4 while waiting for more definitive clues from the Budget 2023 presentation (24 Feb) and the ongoing results season. For the 11th out of the 12th sessions, market breadth remained negative, falling to 0.51 from 0.58 a day ago. For the 2nd day in a row, foreign institutions loaded up their net buying positions (+RM77m, Feb: -RM107m). Local institutions were the top net sellers for the 6th day in a row (-RM74m, Feb: -RM84m), followed by retailers (-RM3m, Feb: +RM191m).
KLCI ended a 3-day losing streak of 14.7 pts by edging up 0.5-pt to 1,474 (still below the key 200D MA of 1,477). We reiterate that a successful breakout above the 200D MA and 20D MA (1,485) clusters is required for KLCI to advance to the 1,500-1,528 zones. Conversely, a significant retreat below the 200D MA will trigger a slide to 1,450–1,460.
In tune with an overnight rout from Wall St, KLCI is likely to remain under siege (support: 1,460-1,470; resistance: 1,487-1,500), as investors await clearer cues from the critical Budget 2023 presentation and the ongoing results season coupled with the weak RM.
Our remaining Jan stock picks on SCGBHD (4.7% gain), SUNWAY (0.6% gain), OSK (1% gain), SENFONG (2.1% gain), GFM (2.3% gain), ANCOMNY (7% gain), STAR (6.1% loss), and GENM (0.7% loss) were all squared off in the wake of the market's violent swings.
Source: Hong Leong Investment Bank Research - 22 Feb 2023
Created by HLInvest | Jul 19, 2024