MARKET REVIEW

Global. Asian markets ended marginally higher last Friday as investors continue to bet that Biden, who is seen as less combative in foreign policy among key trading nations, looks increasingly certain to win the US presidential contest. Despite a strong Oct jobs report, the Dow eased 66 pts to 28323 (+6.9% WoW) on the back of surging US Covid-19 cases (topped a single day record at 132k) and pending the official election results’ release.

Malaysia. KLCI rose 18.2 pts to record its 3rd consecutive gains as investors braced for a generous and ‘rakyat-centric’ Budget 2021 coupled with positive view that Biden’s comfortable lead in the presidential race could avoid a contested election results and clear the way for a much-needed Covid-19 stimulus package. Foreign investors’ buying jumped 70% to RM240m whilst local institutional investors and retailers selling amounted to RM128m (3rd consecutive sell) and RM112m (the biggest disposal since RM206m on 2 Oct) in equities, respectively.

TECHNICAL OUTLOOK: KLCI

After rallying 52.7 pts WoW to close at 1519.6 last Friday, KLCI is likely to resume its upward trajectory towards 1535 (50% FR) and 1555 (61.8% FR) zones this week, supported by bullish downtrend line (near 1500) breakout and bottoming up indicators. However, worries about the economic impact from rising CMCOs and ongoing Nov results season may cap further rally. Key supports are situated at 1500, 1489 (200D SMA) and Head & Shoulder neckline at 1474 (10 Sep) levels.

MARKET OUTLOOK

The Biden presidency (view as a moderate and less confrontational leader) and a stimulative Budget 2021 are likely to keep our market in celebration mode but concerns about the economic impact from rising CMCOs and ongoing Nov results season may restrict further rally. Weekly supports are pegged at 1500-1489-1474 whilst resistances are situated near 1535-1541-1555 levels.

Sector wise, HLIB reiterates Overweight rating on the glove sector, given its strong earnings prospects as it is a key beneficiary of the robust global demand owing to Covid19. Moreover, in the absence of a widely-speculated windfall tax on the sector and with the removal of this major overhang, the sector is riped for a further rebound in the short term.

Source: Hong Leong Investment Bank Research - 9 Nov 2020