Market Review

• In tandem with choppy Wall St overnight, Asian bourses closed mixed after Nikkei 225 erased all the 469 pts early gains to end 45 pts lower at 22868. Meanwhile, Trump's tour of Asia also remained in the spotlight as he addressed the US-China trade deficit during a Thursday speech in Beijing and said he would work on fixing "unfair" trade practices.

• Taking cues from positive BNM’s optimistic view on global growth and the domestic economy, KLCI inched up 2.6 pts to 1746.8, led by banking stocks as BNM said they may consider reviewing the current degree of monetary accommodation, suggesting a possible increase in OPR next year. Trading volume and value jumped 19% and 44% to 3.09bn shares worth RM2.34bn, respectively, with active interests on penny stocks and ACE counters.

• Overnight, the Dow plunged as much as 250 pts intraday, as the Senate Finance Committee would defer implementing a 20% corporate tax until 2019 from originally proposed in 2018 by House Republicans. However, the Dow trimmed the losses to 101 pts (snapping a seven-day win streak) at 23462 after the House Ways and Committee approved a bill to overhaul the tax code, setting up a vote by the full House.

Technical View

Mild signs of bottoming up to reclaim above 1750

• In the wake of ongoing Nov reporting season, KLCI is still unable to penetrate above the 1750 (or 200d SMA) resistance. Nevertheless, KLCI appears to be finding support along 1733 (25 Oct low) after tumbling from a high of 1793 (13 Sep), accompanied bottoming up indicators. A successful breakout above 1750 is likely to lift index higher towards 1756 (38.2% FR), 1763 (50% FR) and 1770 (61.8% FR) zones. Conversely, a breakdown below 1740 (3 Nov low) will witness further retracement towards 1733 and 1721 (60-w SMA) territory.

Market Outlook

• We expect Dow to engage in an extended consolidation mode until more clarity on the tax reforms, given that the key indicators are in overbought condition. However, any pullback is likely to be shallow (key support at 23k) and temporary as the primary uptrend remains intact, supported by the long-legged Doji pattern.

• Back to our local front, although sentiment is likely to remain cautious in the wake of ongoing 3Q17 reporting seasons, further sharp fall should be well-cushioned by firmer oil prices and Ringgit, BNM positive optimism on Malaysia economy and consensus expectations of a positive 3Q17 Malaysia GDP (17 Nov).

• Closed position: We had squared off Malton (6.5% loss) at RM1.15 (R2) yesterday amid weakening technical.

Source: Hong Leong Investment Bank Research - 10 Nov 2017