MARKET REVIEW

Asia/US. Tracking the back-to-back rebound by Dow last Friday, most Asian markets closed broadly higher but China shares ended marginally lower as investors digest China’s modest GDP growth target of “around 5%” for 2023, below the lower end of market expectations. Ahead of the crucial Powell's testimony to the Congress and the Feb ADP and nonfarm payrolls data, Dow rose 41 pts to 33,431 (its 4th straight gain), trimming its intraday 182-pt gain.

Malaysia. KLCI eased 0.9-pt to 1,452.6, mainly due to a last-minute selling of selected banking and telco heavyweights. Market breadth remained at positive territory despite easing to 1.22 from 1.54 the previous day, with turnover advanced by 5.6% to 2.84bn shares valued at RM1.79bn. Foreign investors (-RM183m, Mar: -RM352m) continued their selling spree for the 4th consecutive day whilst local institutions (+RM161m, Mar: +RM402m) and retailers (+RM22m, Mar: -RM50m) were the major net buyers.

TECHNICAL OUTLOOK: KLCI

In view of grossly oversold technical coupled with the multiple long -legged Doji and Hammer formations, KLCI is poised for a downtrend reversal. A successful breakout above the short-term obstacles located near the 1,472-1,480-1,490 levels will spur KLCI towards the 1,500–1,528 mark. Conversely, further retreat below 1,444 (1 Mar low) could trigger another correction towards 1,410-1,432 zones.

MARKET OUTLOOK

In view of the grossly oversold technical indicators and KLCI’s undemanding CY2023 valuation (12.8x vs 10Y mean 16.8x), Bursa Malaysia is set for an oversold rebound with key resistance pegged at 200D MA near 1,472 and 1,500. Nevertheless, further upside might be restricted as investors await the Powell’s speech, OPR decision on 9 March, continuous net outflows of foreigners, the weak RM (vs USD) due to concerns about a longer Fed rate cycle and a widening FFR-OPR spread, as well as escalating geopolitical anxieties (e.g. Russia-Ukraine war and US-China ties).

VIRTUAL PORTFOLIO (FIG1)

Yesterday, We Took Profit on EDGENTA (5.3% Gain) and Cut Loss on EVERGRN (11.4% Loss).

Source: Hong Leong Investment Bank Research - 7 Mar 2023