MARKET REVIEW

Global. In tandem with overnight Dow’s 328 pts rally, Asian markets ended mostly higher, thanks to the promising vaccines’ progress (from Pfizer, Moderna and AstraZeneca), easing political uncertainty as the Trump administration approved the start of the presidential transition and the nomination of pro-stimulus Yellen (former Fed’s Chair) as Treasury Secretary. Ignoring the soaring Covid-19 cases, the Dow surged 455 pts to close at 30046 record high amid positive vaccine news, a formal start of Biden’s transition to White House and hope for a strong economic recovery in 2021 after Biden nominated Yellen as Treasury Secretary.

Malaysia. Bucking positive regional markets, KLCI plunged 19.1 pts to 1578.4 as concerns over the Budget 2021 voting (26 Nov) and the outlook for Malaysia economy amid talks of further CMCO extensions following recent spike in Covid-19 cases and clusters, weighed on investors’ confidence. Markets breadth was bearish with 1093 losers edged 250 gainers with 8.4bn securities traded for RM4.3bn.

TECHNICAL OUTLOOK: KLCI

Following a 126-pt relief rebound from 1452 low, KLCI is expected to lock in profit taking consolidation in the short term to neutralise its excessive overbought momentum. Unless swiftly reclaiming above the 10D SMA near 1591 after yesterday’s 19-pt slide, the benchmark is envisaged to retrace further towards 1555-1535 supports before staging a technical rebound. Key resistances are situated at 1591-1600-1618. A successful breakout above these barriers would likely signal better days ahead with more upside targets at 1640 (150W SMA) and 1669 (200W SMA) zones.

MARKET OUTLOOK

Although overnight Dow’s strong record closing and a 3.9% rally in Brent oil price may provide a fillip to local bourse today, any techncial rebound is likely to be capped near 1600-1618 zones amid grossly overbought technical readings, lingering concerns over extended CMCO and protracted economic damage to Malaysia following unabated surge in Covid-19 cases, and the Budget 2021 approval on 26 Nov. Key supports are pegged at 1555-1535 levels. Stock wise, we expect ARMADA (RM0.27-BUY-TP RM0.65) share prices to advance further towards upside targets at RM0.30-0.31-0.325 after reclaiming above multiple key SMAs. Key supports are situated at RM0.26-0.25-0.24. Likewise, SERBADK (RM1.70-BUY-TP RM2.50) could be heading towards RM1.80-1.84-1.90 upside targets, pending a successful breakout above 200D SMA near RM1.73. Key supports are pegged at RM1.67-1.63-1.60.

Source: Hong Leong Investment Bank Research - 25 Nov 2020