MARKET REVIEW

Global. Asian markets ended mostly higher, as the latest Oxford-AstraZeneca’s vaccine progress (which showed an average efficacy of 70%) brought hopes of economic recovery, overshadowed concerns of global economic damage amid surging Covid-19 cases worldwide and increasing lockdowns. After falling 216 pts WoW, the Dow rebounded 327 pts overnight to 29591 amid latest promising vaccines’ progress (from Pfizer, Moderna and AstraZeneca) and market talks that Biden plans to select pro-stimulus Janet Yellen (former Fed’s Chair) as Treasury Secretary.

Malaysia. Tracking higher regional markets, KLCI rose 3.7 pts at 1597.5 following news of successful Covid-19 vaccine trials. However, markets breadth was negative with 674 losers edged 540 gainers with 9.4bn securities traded for RM4.5bn, as investors await the Budget 2021 voting on 26 Nov. Foreign investors net bought RM170m shares whilst local institutional and retail investors net sold RM151m and RM19m, respectively.

TECHNICAL OUTLOOK: KLCI

Following a 146-pt rally from 1452 low, KLCI is expected to lock in profit taking consolidation in the short term to neutralise its excessive overbought momentum with key supports at 1591 (10D SMA) and 1579 (76.4% FR) levels. Failure to defend at these supports could induce further selling pressures towards 1555-1535 levels. Stiff overhead resistances remain at 1600-1618 levels. A successful breakout above these barriers would likely signal better days ahead with upside targets at 1640 (150W SMA) and 1669 (200W SMA) zones.

MARKET OUTLOOK

After enjoying a 146-pt rally from 1452 low, KLCI is likely to witness short term profit-taking pullback amid grossly overbought technical readings and concerns over the huge amount of economic uncertainty created by spiking Covid-19 infections despite vaccine optimism, expectations of weaker 4Q20 economy and corporate earnings in Malaysia (from CMCO 2.0), the peak of the 3Q20 results season, and the Budget 2021 approval on 26 Nov. Key supports are pegged at 1591-1579-1555 levels whilst resistances fall on 1600-1618-1640 levels.

Stock wise, we expect TOPGLOV (RM7.35-BUY-TP RM10.38) share prices will experience a knee-jerk selling following the tempory shut down of its 28 factories (21 are glove factories and the remaining 7 are non-glove factories) in Klang due to a high number of Covid-19 cases among its workers. Technically, we see good supports at RM7.00 follow ed by RM6.73 (lower BB) and RM6.15 (17 Nov low) levels. Stiff resistances are pegged at RM7.95 (mid BB) and RM8.38 (50D SMA)

Source: Hong Leong Investment Bank Research - 24 Nov 2020