MARKET REVIEW

Asia. Despite a rebound in technology shares after Nasdaq’s 2% relief rally overnight, Asian markets ended mixed due to surging Covid-19 cases worldiwde and fading vaccine enthusiasm as challenges remain on the manufacturing capacity, delivery and storage of the vaccine even if it is proven safe and effective. After hitting all-time high at 29933 (9 Nov), the Dow fell for a 2nd straight session to close 317 pts lower at 29080 as investors weighed the timeline for the mass rollout of an effective vaccine coupled with the longawaited pandemic stimulus package amid rising US coronavirus infections.

Malaysia. Powered by gains in banks, plantation, O&G and gaming heavyweights, KLCI jumped 20.7 pts at 1590.8 as investors rotated from pandemic play to the economic recovery proxies arising from the vaccine discovery. Trading volume rose 15% to 16.6bn shares worth RM5.9bn, with 779 gainers versus 466 losers, led by active trading interests on ACE shares and penny stocks.

TECHNICAL OUTLOOK: KLCI

Following a bullish LT downtrend resistance breakout (from all-time high of 1896 on 20 Apr 2018) to end at 1590 yesterday (rallying 9.5% from 1452 low on 2 Nov), more upside is anticipated towards 1600 psychological barrier before strong overbought profit taking sets in near formidable resistances at 1618 (YTD high) and 1635 zones. Key pullback supports are situated at 1555-1536 levels. A decisive breakdown below 1536 will trigger bigger correction towards 1514-1500-1489 levels.

MARKET OUTLOOK

KLCI has rallied 9.5% or 138 pts from a low of 1452 (2 Nov) to 1590 yesterday, driven by the less combative Biden (vs Trump) on foreign and trade policies, expansionary Budget 2021 and Covid-19 vaccine optimism as well as the migration from a pandemic-themed to a recovery-focused proxies. Nevertheless, overbought profit-taking consolidation will emerge in the wake of lingering concerns about Budget 2021 approval, weaker 4Q20 economy and corporate earnings due to the expansion of CMCOs, surging Covid-19 infections worldwide. Key supports are pegged at 1555-1536-1514 levels whilst resistances are situated near 1600-1618-1635 levels.

Source: Hong Leong Investment Bank Research - 13 Nov 2020