MARKET REVIEW

Global. Asian markets ended mixed as investors weighed on the upbeat UK’s approval of the Pfizer-BioNTech Covid-19 vaccine for emergency use and Fauci’s warning that the US is likely to see a “surge upon a surge” of Covid-19 cases after the Thanksgiving holidays and ahead of the year-end festive seasons. The Dow fell as much as 224 pts after Powell called the US economy “extraordinarily uncertain” and the Covid-19 hospitalizations hit record high. However, the positive UK's vaccine approval and encouraging updates on stimulus deal lifted the Dow from losses to close 60 pts higher at record high 29883.

Malaysia. After staging a strong 39.6-pt rebound on 1 Dec, KLCI succumbed to a mild 3.5- pt profit taking at 1598.7, as investors assessed the repercussion of CMCO 2.0 to our economy amid elevated Covid-19 cases and clusters and the conclusion of 3Q20 results season. Market breadth stayed positive but the G/L ratio reduced to 1.15 from 1 Dec (1.59) and 30 Nov (1.22) with 9.2bn shares changed hands for RM5.4bn.

TECHNICAL OUTLOOK: KLCI

Following a strong 39.6 pt technical rebound on 1 Dec, KLCI eased 3.5 pts to 1598.7 on mild profit taking yesterday. Barring further retreat below immediate 1579-1593 supports, KLCI could still endeavour to re-challenge the critical YTD high at 1618.7 in the near term, taking cue from the vaccines optimism and the traditional Dec window dressing. Taking out the hurdle could signal more uspide towards formidable resistances at 1639 (150W SMA) and 1668 (200W SMA) zones before major profit taking emerge. On the contrary, a decisive breakdown below 1579-1593 supports will trigger a renewed selldown towards 1562-1555-1535 territory.

MARKET OUTLOOK

Overall, we remain optimistic that KLCI could still break the critical YTD high at 1618.7, taking cue from the vaccines optimism, traditional Dec window dressing (average +3.8% return from 1990-2019 with a 87% successful hit rates) and the continued shift from a predominantly pandemic -themed to a recovery-focused beneficiaries, given that investors are looking for an opportunity to increase risk-on exposures. Nevertheless, KLCI could still engage on a wild swings mode (1555-1618 zones) due to the risks of CMCO 2.0 impact to our economy amid elevated Covid-19 cases and clusters.

Source: Hong Leong Investment Bank Research - 3 Dec 2020