MARKET REVIEW

Global. Bucking a spiking Covid-19 virus toll globally, Asian markets ended mostly higher amid China’s upbeat industrial profits in Oct, expectations of a swift rollout of vaccines from the US, Europe and China as well as easing political uncertainty in the US. In a Black Friday holiday-abbreviated session, the Dow rose 38 pts at 29910 while the Nasdaq rallied 0.9% to 12206 as the gains in technology stocks offset losses in recovery companies on fears of further Covid-19 restrictions during the Thanksgiving holidays. WoW, the Dow and Nasdaq rallied 2.2% and 3%, respectively amid decreasing political uncertainty and positive vaccine news.

Malaysia. Following back-to-back gains of 33.7 pts, KLCI eased 4.5 pts last Friday on profit taking at 1607.6 after securing the approval of the Budget 2021 at the policy stage on 26 Nov. Market breadth was mildly positive as 621 gainers edged 604 losers with 10.4bn securities traded for RM5.5bn. Meanwhile, foreign investors were the net sellers (RM158m) whilst local institutional and retail investors net bought RM142m and RM16m in equities, respectively.

TECHNICAL OUTLOOK: KLCI

Despite losing 4.5 pts last Friday, KLCI managed to soar 13.9 pts WoW, registering its 4th consecutive gain. Barring a fall below 10D SMA near 1598, we expect KLCI to make another attempt to retest YTD high at 1618.7 (27 Nov) this week. Breaking the hurdle successfully would signal more upside towards formidable resistances at 1640 (150W SMA) and 1654 (daily BB) zones. Conversely, slipping below 1598 support will induce further consolidation towards 1579 (76.4% FR) and 1555 supports.

MARKET OUTLOOK

To recap, the approval of the Budget 2021 at policy level last Thursday may encourage KLCI to re-challenge YTD high of 1618.7 this week, before proceeding towards formidable resistances at 1640-1654 zones on profit taking pause. Nevertheless, market volatility to persist (with key supports at 1598-1579-1555) due to the concerns of CMCO 2.0 impact to our economy amid elevated Covid-19 cases and clusters, as well as the Budget 2021 will be debated and voted again on 17 Dec after the committee level.

Meanwhile, Brent oil prices are likely to retest USD50 psychological barrier soon ahead of the OPEC+ meetings on 30 Nov and 1 Dec (in anticipation of a further delay in raising output by 2 million bpd from 1 Jan 2021) and renewed geopolitical tensions after Iran’s president accused Israel of killing its nuclear scientist and vows to respond ‘at the proper time’. Hence, we expect active trading interests on oil & gas stocks such as Armada (HLIB research-BUY-TP RM0.65), PCHEM (BUY-TP RM7.45), SERBADK (BUY-TP RM2.50), MISC (HOLD-TP RM7.69) and DAYANG (HOLD-RM1.10)

Source: Hong Leong Investment Bank Research - 30 Nov 2020