MARKET REVIEW

Asia/US. Asian markets declined amid overnight Wall St correction, taking cues from the risk that the Fed may over tighten and create a recession in the US, as well as gloomy outlook from US retailing bellwethers. Stronger-than-expected US Jan PMI and a shaky geopolitical outlook further supported advances in Treasury yields and the dollar index, pricing in the rates that would escalate to 5.25-5.50% in June (57% probability now vs 3% a month ago). The Dow ended -85 pts at 33,045 after flirting with gains (+116 pts) and losses (-181 pts) as the Feb FOMC minutes signalled that further rate hikes are tilted to the upside to tame inflation. Overall, the Fed members are more willing to raise rates further post Feb FOMC meeting following the recent wave of strong economic data.

Malaysia. Tracking the tepid regional markets, KLCI tumbled 10 pts to 1,464 as sentiment remained cautious ahead of critical revised Budget 2023 tomorrow and the ongoing results season, as well as falling RM (vs USD) due to expectations of a widening FFR-OPR spread. For the 12th out of the 13th sessions, market breadth remained negative, sliding to 0.42 from 0.51 a day ago. For the 3rd day in a row, foreign institutions were the net buyers (+RM48m, Feb: -RM59m), followed by retailers (+RM95m, Feb: +RM286m) whilst local institutions were the major net sellers for the 6th straight day (-RM143m, Feb: -RM227m),

TECHNICAL OUTLOOK: KLCI

KLCI resumed its selling momentum, slipping 10 pts to close at 1,464. The decisive breakdown below the 200D MA (1,477) could trigger further correction towards 1,432- 1,450–1,460 zones before staging an imminent rebound. We reiterate that a successful breakout above the 200D MA (1,477) and 20D MA (1,483) clusters is required for KLCI to advance to the 1,500-1,528 zones.

MARKET OUTLOOK

Tracking an extended correction on Wall Street and weakening RM amid caution over the rate outlook, and pending more solid cues on Budget 2023 revision, KLCI is likely to remain under siege (support: 1,432-1,450-1,460; resistance: 1,477-1,483-1,500). Technically, MEDIA will extend its sideways consolidation with key supports at RM0.40-0.43 levels. The stock needs to overcome stiff barrier near RM 0.475 to advance toward RM0.50-0.535 territory.

Source: Hong Leong Investment Bank Research - 23 Feb 2023