MARKET REVIEW

Global. Despite all-time high closing on Dow overnight, Asian markets ended lower on profit taking from the recent rally, mainly attributed to promising progress toward Covid-19 vaccines, the formal start of Biden’s transition to the White House and the nomination of pro-stimulus Yellen (former Fed’s Chair) as Treasury Secretary. Ahead of the Thanksgiving holiday, the Dow retreated 173 pts to 29872 after hitting all-time high at 30116 (on 24 Nov) as grim weekly jobless claims of 778k people amid renewed lockdowns to contain surging Covid-19 cases and a lack of stimulus dented investors’ confidence.

Malaysia. Tracking a record-breaking Dow overnight and soaring oil prices, KLCI managed to recoup the 24 Nov losses to finish 19.2 pts higher at 1597.6, overshadowed the concerns over Budget 2021 voting (26 Nov) and the outlook for Malaysia economy amid spiking in Covid-19 cases and clusters. Markets breadth was positive as 653 gainers edged 504 losers with 8.9bn securities traded for RM4.2bn.

TECHNICAL OUTLOOK: KLCI

Following a 145-pt relief rebound from 1452 low to end at 1597.6 yesterday, the near term odds would still favour more profit taking consolidation to neutralise its excessive overbought momentum. Unless swiftly breaking above overhead resistances at 1600-1618 zones, the benchmark is envisaged to retrace further towards 1579-1555 territory before staging a technical rebound. Taking out the said resistances would likely signal a resumption of a rally is underway, with potential upside towards 1640 (150W SMA) and 1669 (200W SMA) zones.

MARKET OUTLOOK

Despite a 19.2-pt rebound to 1597.6, the near term odds would still favour more profit taking consolidation (supports: 1555-1579; resistances: 1600-1618) to neutralise KLCI’s excessive overbought momentum, with major concerns over the Budget 2021 approval today and CMCO2.0 repercussion to the economy amid elevated Covid-19 cases and clusters. Key supports are pegged at 1555-1535 levels. Stocks wise, positive results from furniture stocks (strong demand due to WFH) like HEVEA (HLIB Research-BUY-TP RM0.83) and EVERGRN (HLIB Research-BUY-TP RM0.65) could induce further buying interests. A successful flag breakout for Hevea is likely to lift prices higher towards RM0.80- 0.85 zones, with key supports pegged at RMRM0.67-0.695 levels. Meanwhile, after retreating 13.7% from 52-week high of RM0.475, EVERGRN may trend sideways with key supports situated near RM0.365-0.395. A successful neckline resistance breakout above RM0.43 will spur prices higher towards RM0.475-0.50 zones.

Source: Hong Leong Investment Bank Research - 26 Nov 2020