MARKET REVIEW

Global. Asian markets ended higher following news that Trump may be discharged from the hospital today as well as rising optimism for further fiscal stimulus. Overnight, Dow surged 466 pts to 28148 on optimism that lawmakers would reach a compromise on a new stimulus deal and Trump may soon be discharged from hospital today. Sentiment was also boosted by polls that are shifting from a close election to more a dominant Biden and clean succession, easing concerns about a contested election result and a messy legal battle.

Malaysia. Tracking higher regional markets and a 2nd consecutive session of net foreign inflows, KLCI staged a strong 12.1-pt technical rebound lifted by buying interest in HARTA, TOPGLOV, PCHEM, SIMEPLT, HLFG, PETDAG and IOICORP. Trading volume increased to 6.3bn shares worth RM4.6bn as compared to Friday’s 5.5bn shares worth RM4.1bn. Market breadth was positive with 728 gainers as compared to 344 losers. Yesterday, local

retailers (-RM53m) remained the net sellers (5D total –RM272m) while the local institutional (+RM19m) and foreign (+RM34m) investors were the net buyers.

TECHNICAL OUTLOOK: KLCI

Following the decisive technical rebound above the major 200D SMA near 1500 levels and an overnight rally on Wall St, the odds are now favouring the bulls to stage a breakout above the downtrend line resistance near 1518 levels. A successful breakout above this hurdle will reignite a fresh uptrend towards 1526 (100D SMA) and 1543 (50D SMA) zones. On the contrary, a pullback below 1500 will witness KLCI to be stuck in a prolonged downward consolidation with major supports situated near 1488 (lower BB), 1474 (11 Sep low) and 1460 (lower downtrend channel) levels. 1460 (lower downtrend channel) levels.

MARKET OUTLOOK

Following an overnight Wall St’s rally, the bulls may revisit to push KLCI above the 1518 (downtrend line from 1618) resistance today. However, buying momentum could be short lived as concerns over the expiry of the 6M grace period for loan repayments coupled with the alarming Covid-19 cases (reported another new high of 432 cases yesterday vs previous high of 317 cases on 3 Oct) and clusters locally. Hence, short term market consolidation could prevail (supports 1474-1488-1500; resistances 1518-1526-1543) amid fears of more restricted MCOs, which could adversely affect the nascent economic recovery. On stock selection, rubber glove and personal protective equipment (PPE) will remain in the limelight amid virus resurgence worries.

Source: Hong Leong Investment Bank Research - 12 Oct 2020