Market review

• The MSCI Asia Pacific Index (MXAP) rose 0.65% or 0.89- pt to 136.65, boosted by improving industrial profits in China and recovery in regional currencies as USD index retreated following recent rallies. However, further gains were capped by falling energy shares after Reuters reported that Saudi Arabia would not attend talks with non-OPEC members to discuss production cuts ahead of the 30 Nov OPEC meeting.

• Tracking regional markets and mild window dressing activities, KLCI gained 1.4 pts to 1628.7 (after traded within intra-day high of 1630.6 and a low of 1623.6), spurred by MAXIS (+19 sen to RM6.00), GENM (+10 sen to RM4.83), PPB (+18 sen to RM15.98), GENTING (+9 sen to RM8.09) and TM (+5 sen to RM6.27).

• Following a three consecutive weekly gains, the Dow fell 54 pts to 19098 on profits taking amid recent record setting rallies. To recap, Dow have been on a roll since Donald Trump's surprise presidential election victory on Nov. 8 (+4.2%), with "Trumponomics" such as infrastructure spending, massive corporate tax cuts and environmental and financial deregulation, which could spur economic growth.

Technical view

ST range bound within 1610-1640 levels

• In anticipation of year-end window dressing activities, KLCI is attempting to break the immediate 1635 (lower downtrend channel) resistance in the near term. A decisive breakout above 1635 will open up further gains toward 1650-1667 levels. On the flip side, a breach below 3M low of 1614 (14 Nov) will witness potential selldown to 1600 psychological support.

Market outlook

• Market sentiment will continue to be determined by the ringgit weakening bias and weak oil prices, compounded by the lack of positive domestic catalysts and the ongoing lackluster 3Q16 reporting season. That said, we expect the traditional year-end window dressing activities to provide a good cushion in the event of any major selldown.

• Trading Buy-EVERGREEN: At RM1.01, the stock is only trading at 7.5x FY17 P/E (about 12% below 10-year P/E of 8.5x and 23% discount to its peers), supported by core earnings CAGR of 69% over FY15-17 and decent FY16- 17 dividend yield of 3.4-4.0%. A decisive breakout above 30-d SMA breakout will signal further advance towards RM1.14-1.21 zones. Key supports fall on RM0.935-0.975. Cut loss at RM0.93

Source: Hong Leong Investment Bank Research - 29 Nov 2016