MARKET REVIEW

Asia/US. Tracking Wall St’s extended losses, most Asian bourses edged lower as weaker than-expected China Feb inflation data pointed to a weak economic recovery, while fears of a more hawkish Fed rhetoric continued to chip away sentiment. Dow tumbled 544 pts to 32,254, recording its 3rd consecutive decline, led by a rout in financial stocks as sentiment was hit by a 60% slide in SVB Financial's shares after the company planned to raise USD2bn to help offset losses on bond sales. Despite a larger-than-expected increase in weekly jobless claims and the US employers cut 77,770 jobs in Feb, investors continued to weigh hawkish remarks by the Fed that a 50bps hike could be locked in on 22 Mar FOMC meeting should Feb jobs report tonight and CPI print (14 Mar) remain elevated.

Malaysia. Despite retaining OPR at 2.75%, KLCI lost 5.1pts to 1,449.5 (a fresh 3M low), as worries over sustained high interest rates and inflation globally coupled with persistent foreign net outflows dampened sentiment. Market breadth improved slightly to 0.89 from 0.59 the previous day. Local institutions (+RM41m, Mar: +RM596m) and retailers (+RM17m, Mar: -RM11m) emerged as main net buyers, while foreign investors (-RM58m, Mar: -RM585m) maintained their selling spree for the 7th session in a row.

TECHNICAL OUTLOOK: KLCI

Unless KLCI stage a successful breakout above immediate key barrier of 200D MA at 1,470, it is likely to be trapped in an extended consolidation, taking cue from the bearish sentiment from Wall St. Further decline below 1,444 (1 Mar low) may entice stronger selling pressure towards the 1,410–1,432 zones. Conversely, a strong breakout above 1,470 may spur the index to revisit 50D MA (1,478), 1,491 (23.6% FR) and 1,500 levels.

MARKET OUTLOOK

After failing to stage a breakout above immediate resistance at 1,470 (200D MA), KLCI is likely to engross in a prolonged consolidation mode, taking cues from (1) downbeat correction on Wall Street, (2) persistent net foreign outflows (7th consecutive month totalling RM5.04bn), (3) weak RM (vs USD) due to worries about a widening FFR-OPR spread and Fed’s restrictive policy stance, (4) escalating geopolitical anxieties (i.e. Russia-Ukraine war and US-China ties), and (5) UMNO elections on 18 Mar. Nevertheless, KLCI's undemanding CY2023 12.3x P/E (vs. 10Y mean 16.8x) and its oversold technical indicators may cushion further slide near 1,400-1,430-1,440 zones. On the upside, key hurdles are situated at 1,478-1,490-1,500 levels.

VIRTUAL PORTFOLIO (FIG1)

In the wake of the sluggish market sentiment, we had squared off TTVHB (4% gain), RGB (4.8% loss) and CARLBERG (8.1% loss) yesterday.

Source: Hong Leong Investment Bank Research - 10 Mar 2023