MARKET REVIEW

Asia/US. Asian markets ended mixed amid lingering concern of a rapid global economic slowdown following dismal economic data from the US and China coupled with more red flags in 2H22 earnings outlook. Shrugging off the sluggish US July housing market print (1.45m, forecast 1.54m) and tumbling oil prices amid downbeat economic data and uncertainty surrounding the revival of the 2015 Iran nuclear deal, Dow ended +240 pts at 34,152, boosted by upbeat results from Walmart, Home Depot and July industrial production report (+0.6%, forecast +0.3%). Overall, investors will parse the July FOMC minutes and July retail sales reports tonight as optimism about peak inflation and a potential Fed pivot coupled with resilient consumer spending had been primary drivers behind the 15.1% rally from recent bottom of 29,654.

Malaysia: Bucking a cautious mode in regional markets, KLCI staged a long-awaited neckline resistance breakout to end +14.8 pts at 1,518.8, led by active buying interests in the telcos and plantation sectors. Market breadth (gainers/losers) rebounded to 1.18 from 0.64 a day ago whilst daily volume and value jumped 6% and 28% to 2.69bn shares worth RM2.21bn.

TECHNICAL OUTLOOK: KLCI

After 12 days of sideways consolidation within 1,483-1,512 zones, KLCI finally staged a strong neckline resistance breakout above 1,512 to end +14.8 pts at 1,518.8 (+110 pts from 2Y low of 1,408) zones. Barring a sharp pullback below 10D/20D MA near 1,487-1,502 supports, the benchmark may continue its advance towards 1,53 1 (200D MA) and more formidable hurdle at 1,566 (76.4% FR). Conversely, a sharp fall below the said supports may drive the index to revisit 1,457-1,475 levels.

MARKET OUTLOOK

Another strong performance from Wall St overnight may prompt KLCI to retest the long awaited 200D MA near 1,531 levels, underpinned by bullish neckline resistance breakout above 1,512 and persistent foreign net inflows. Meanwhile, further oversold rebound on glove stocks may provide a good opportunity to trim positions given that glove makers are still bracing for industry-wide headwinds caused by an acute oversupply and margin compression due to falling ASPs. We maintain UNDERWEIGHT on the glove sector with sell ratings on TOPGLOV (TP: RM0.83), HARTA (TP: RM1.92) and a HOLD rating on KOSSAN (TP: RM1.44).

Source: Hong Leong Investment Bank Research - 17 Aug 2022