MARKET REVIEW

Global. Most Asian markets ended mixed over Covid-19 exhaustion as the ever-increasing number of cases in Europe and the US are sparking fears that more countries will reimpose lockdowns. Last Friday, the Dow surged 399 pts to 29479 (+1156 pts or 4.1% WoW) as the rotation to economically-sensitive industries regained momentum, overshadowed a surge in coronavirus cases that could lead to more restrictions and crimp growth. Meanwhile, upbeat results from Disney, DraftKings, Applied Materials and Cisco also underpinned investor sentiment.

Malaysia. After falling as much as 18.8 pts to 1572 on profit taking, KLCI staged a strong rebound before easing 1.1 pts at 1589.7, as investors revisited bashed-down glove stocks and cyclical stocks arising from the vaccine optimims, as well as cheered the smaller-thanexpected 3Q20 GDP contraction. Meanwhile, retail investors net sold RM70m shares whilst local institutional investors and foreign investors were the net buyers with RM67m and RM3m in equities, respectively.

TECHNICAL OUTLOOK: KLCI

KLCI rallied 70 pts WoW to 1589 last Friday, recording its 2nd straight weekly gains after bullish downtrend resistance (from YTD high 1618) and multiple key SMA breakouts. More upside is anticipated towards 1600 and 1618 (YTD high) barriers before strong overbought profit taking sets. A successful breakout above 1618 will spur index higher to our medium to long term targets at 1643 (150W SMA) and 1669 (200W SMA) zones. Meanwhile, overbought pullback supports are situated at 1555-1535 levels. A decis

MARKET OUTLOOK

Following a 137-pt or 9.4% rally from a low of 1452 (2 Nov) to 1589 last Friday, KLCI’s technicals has turned grossly overbought. We believe a pullback is likely this week amid concerns about the uneven global economic outlook due to the surging Covid-19 infections worldwide and new lockdowns coupled with uncertainty about the production and distribution of the Covid-19 vaccines. Moreover, lingering worries about weaker 4Q20 economy and corporate earnings in Malaysia due to the CMCO 2.0 since 14 Oct, ongoing 3Q20 results season, and the Budget 2021 approval (expected to be held by end Nov) will continue to affect sentiment. Key supports are pegged at 1555-1536 levels whilst resistances are situated near 1600-1618 levels.

Source: Hong Leong Investment Bank Research - 16 Nov 2020