MARKET REVIEW

Global. Asian markets ended mildly higher as investors continued to hope US lawmakers will eventually agree on a stimulus bill the earliest by end of this week despite major differences remain. Sentiment was also boosted by news that Moderna’s Covid -19 vaccine could be available for emergency use in December if it gets positive results from its interim trial in November. Overnight, the Dow slipped 98 pts at rose 28210 pts after a volatile trading session amid lingering concerns whether a fiscal stimulus deal might materialize before the 3 Nov election to bolster the flagging US economic recovery. Sentiment was also dampened by falling AstraZeneca shares after Brazilian health authority says a volunteer in Covid vaccine (developed with University of Oxford) study died.

Malaysia. In the midst of heavy selling pressures by foreign investors (-RM163m) on gloves and banks shares, KLCI tumbled 18.6 pts at 1492.4 amid rumours that PM may disssolve the Parliament in December (if the Budget 2021 is not passed) after he was given an audience with the King yesterday. Sentiment was also dampened by uncertainty due to the government WFH’s directives in CMCO areas, raising concerns among investors on the business continuity in the country. Trading volume decreased to 8.5bn shares valued at RM5.9bn against 11bn shares worth RM5.8bn on Tuesday. Market breadth was negative with 375 gainers as compared to 758 losers.

TECHNICAL OUTLOOK: KLCI

As forewarned, a sharp retreat below the 1496 supports (200D SMA and downtrend line from YTD high of 1618) could reignite a risk-off mode, potentially pushing the index lower towards 1488 (lower BB), 1474 (10 Sep low) and 1461 (50% FR) levels. On the contrary, only a successful reclaim above 1515 (10D SMA) and 1525 (50D SMA) overhead resistances would lift the index higher towards 1538-1550 levels next.

MARKET OUTLOOK

Following the breakdown below the critical 200D SMA support at 1496, KLCI is likely to engage in a tug-a-war between the bulls and bears amid rising headwinds ahead of the US presidential election and a resurgence in Covid-19 infections globally coupled with the domestic fluid politics. Moreover, a prolong targeted lockdowns amid spiking Covid-19 transmissions in Malaysia may dampen our expectations for a 2H20 economic and corporate earnings recovery

VIRTUAL PORTFOLIO POSITION-FIG1

In the Wake of the Market Uncertainty, We Took Profit on FPI (6.6% Gain) Yesterday.

Source: Hong Leong Investment Bank Research - 22 Oct 2020