Market review

• In the 2nd day in a row after last week’s 1.4% slide, the MSCI Asia Pacific Index (MXAP) staged a 0.49-pt of technical rebound to 137.86 after oscillating between positive and negative territory amid nervousness ahead of the U.S. presidential vote that has domi nated global headlines. Sentiment was also affected by a larger-than expected decline in China’s exports.

• KLCI rose for a 3rd day as the index staged a strong 13.2- pts relief rally to 1663.8, recouping 16 pts of last week’s 22 pts slump. Despite the gains, most investors remained sideline as trading volume decline 16% to 1.25bn shares amid concern of potential negative surprise in the event of a Trump’s upset.

• The Dow gained for a 2nd day (+73 pts to 18332) as early polls showing Hillary Clinton ahead of Donald Trump in the race to the White House. Wall Street sees Clinton as a status quo candidate lending stability to the markets, while Trump's stances on foreign policy, trade and immigration are less certain.

Technical view

Relief rally to continue assuming a Clinton’s victory

• The bullish engulfing and Marubozu candlesticks could signal further relief rally today towards 1667 (200-d SMA) to 1684 levels, assuming a Clinton’s victory. On the contrary, a major upset by Trump will likely to witness a reversal of ongoing uptrend as KLCI is poised to consolidate downward to near term support of 1639-1643 levels. A breakdown below these supports will witness further fall towards a more solid 1600-1622 floor.

Market outlook

• Today, KLCI movement is likely to be determined by the outcome of the US presidential election, with indications that Clinton is having a marginal edge against Trump marginally in the early polls. Should the outcome favour Clinton, we may see KLCI to stage further relief rally to retest 1684-1700 territory. On the contrary, a Trump’s upset may witness frenzy selloff towards 1600-1622 zones.

Source: Hong Leong Investment Bank Research - 9 Nov 2016