MARKET REVIEW

Global. Asian markets gained on recent strong economic data from China, a resumption of US stimulus package talks and positive UK’s approval for the Pfizer-BioNTech Covid-19 vaccine, which overshadowed the surging Covid-19 cases worldwide. Overnight, the Dow rallied as much as 227 pts to 30110 following news that Pelosi and McConnell resumed negotiations as Congress rushes to strike a Covid-19 stimulus deal before end-Dec. Nevertheless, the index suffered a late-sell-off, paring the gains to 85 pts at 29969 following reports that Pfizer is dialing back 50% of its coronavirus vaccine rollout plan to 50m doses by end-Dec, denting investor optimism on a faster return to normal for global economies.

Malaysia. Positive news on vaccines’ optimism, China’s strong economic data and hopes of a resumption in US stimulus talks catapulted KLCI by 29.5 pts to 1628.3 (rewrote YTD high of 1618.7 on 27 Nov). Market breadth stayed bullish with the G/L ratio jumped to 2.26 from 1.15 on 2 Dec. Meanwhile, trading volume today rose to 12.37bn shares worth RM6.2bn, from 2 Dec 9.22bn units valued at RM5.4bn.

TECHNICAL OUTLOOK: KLCI

Following a powerful breakout above the much-awaited 1618 neckline resistance yesterday, we believe further advance towards 1639 (150W SMA) and 1668 (200W SMA) zones is underway before profit taking pause. Overall, we remain optimistic that further strong breakout above the said hurdles could signal a LT bullish view, probably rechallenge the 1700 psychological barrier. Conversely, near term profit taking pullback is likely to be supported near 1618-1600-1587 levels. A decisive breakdown below 1587 (mid BB) may trigger a renewed selldown towards 1562-1555-1535 territory.

MARKET OUTLOOK

Following a powerful technical breakout above the much-awaited 1618 neckline resistance yesterday, a further advance towards 1639 (150W SMA) and 1668 (200W SMA) zones is underway before profit taking pause, 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 pandemic-themed to recovery-focused beneficiaries. Meanwhile, profit taking pullback supports are situated at 1618-1600-1587 levels.

Source: Hong Leong Investment Bank Research - 4 Dec 2020