Market review

• The MSCI Asia Pacific Index (MXAP) rebounded from previous day 3.2% slump to end 2.4% or 3.2 pts higher to 136.6 as investors digested Trump’s victory and speculated that the newly elect US president will pursue business-friendly policies and fiscal stimulus to spur US economy.

• Tracking a relief rally in regional markets, KLCI rose 5.1 pts to 1652.7, off intraday high of 1664.3 (+16.7 pts) with trading volume shrank 35% to 1.64bn shares as investors continue to reassess Trump’s victory to the US and the Malaysian economy.

• The Dow surged 218 pts or 1.2% to end at18808 (rewrite previous high of 18668) to record a 4th straight winning streak as investors bet Trump will lower taxes, ease corporate regulation and ramp up spending to spur the world’s largest economy. Traders also shrugged off earlier worries over Trump’s anti-globalization rhetoric stances as there would be plenty of legislative check-and balances that would moderate some of Trump’s policies.

Technical view

Facing short term resistance at 1667-1684 levels

• As anticipated, KLCI rallied to an intraday high of 1664 (a tad below our 200-d SMA target at 1667) but profit taking reduced gains to only 5.1 pts yesterday. Riding on extended gains from Wall St overnight, KLCI should stage another attempt to retest 1667 levels today. Only a decisive breakout above 1667 and downtrend line (1670) will lift KLCI from ongoing range bound pattern to gain further ground at 1684-1700 zones. Immediate support remains at 1640.

Market outlook

• Taking cue from another strong overnight Dow’s performance, KLCI is likely to advance further to test higher grounds near 1667-1670 territory. Nevertheless, the index is likely to undergo a period of volatility as investors assess the ongoing Nov reporting season and upcoming economic data (Malaysia 3Q GDP today) while monitoring the seriousness of Trump to follow through his extreme policies

Source: Hong Leong Investment Bank Research - 11 Nov 2016