MARKET REVIEW

Global. Asian markets staged a roaring start to December amid promising China factory activity in Nov and optimism over progress on coronavirus vaccines. The Dow rallied as much as 445 pts to 30083 amid robust Chinese factory data in Nov and vaccine breakthroughs as drugmakers submit paperwork for regulatory approvals and plan for global shipments. However, the gains were reduced to 185 pts at 29824 after Senate Majority Leader Mitch McConnell rejected a new bipartisan USD908bn stimulus plan.

Malaysia. KLCI rebounded 39.6 pts at 1602.3 amid strong bargain hunting in the banking, oil & gas, consumer and telco sectors, recouping 88% of the 44.9 pts sharp 11th-hour selldown on Monday, mainly triggered by the scheduled portfolio rebalancing by MSCI (usually done on the final day in May and Nov). Market breadth stayed positive as the gainers edged the losers on a ratio of 760-to-479 with 9.2bn shares traded for RM5.3bn.

TECHNICAL OUTLOOK: KLCI

Following a strong 39.6 pt technical rebound to 1602.3 yesterday, near term KLCI outlook has returned mildly positive after reclaiming the 1579-1594-1600 territory. Taking cues from overnight Dow’s record close and expectations of Dec window dressing, KLCI may endeavour to re-challenge YTD high at 1618.7 soon. Taking out the said hurdle could signal more uspide towards formidable resistances at 1636 (daily upper BB) and 1668 (200W SMA) zones before major profit taking emerging. On the downside, key supports are situated at 1594-1579-1555 levels.

MARKET OUTLOOK

In the wake of the overnight Dow’s record closing and expectations of Dec window dressing (KLCI grew 3.8% on average from 1990-2019) coupled with promising Covid-19 vaccines trials results, KLCI is expected to resume its upward trajectory towards 1618-1636 zones. Nevertheless, market volatility may persist (with key supports at 1594-1579-1555) due to the concerns of CMCO 2.0 impact to our economy amid elevated Covid-19 cases and clusters.

Source: Hong Leong Investment Bank Research - 2 Dec 2020