MARKET REVIEW

Global. Asia markets ended mostly higher following the FDA’s emergency use authorization of Pfizer-BioNTech Covid-19 vaccine in US and mild progress in US stimulus deal negotiations. Overnight, the Dow reversed from 279-pt gain (after hitting all-time high of 30325 intraday) to end 184 pts lower at 29861, as investors weighed up the risk of further restrictions in the U.S. against optimism over the Pfizer-BioNTech vaccine rollout and renewed efforts on Capitol Hill to reach a stimulus deal.

Malaysia. After rising as much as 11.4 pts intraday to 1696 (+134 pts in Dec and +244 pts from 2M low at 1452) amid traditional Dec window dressing and more funds flowing into recovery/value play themes, KLCI reversed its early gains to end 21.8pts lower at 1662.7 on profit taking as sentiment was roiled (loser 964 thumped gainers 461) by selldown on glovemakers and further political fluidity after Tun Dr Mahathir and Tengku Razaleigh held a joint a press conference.

TECHNICAL OUTLOOK: KLCI

As expected, KLCI rose as high as 1696 (above 1694 high on 7 July 2019 and near our envisaged 1700 resistance) intraday before sharp profit taking activities reversing its early gains to end 21.8 pts lower at 1662.7. Unless the index can swiftly reclaim overhead resistances at 1668 (200W SMA) and 1673 (upper BB) in the near term, KLCI is likely to fall lower towards 1650-1638 (150W SMA)-1618 suppports for a brief consolidation to neutralise its overbought positions, supported by a negative inverted hammer-liked candlestick and weakening technicals. Stiff resistances are pegged at 1700 and 1732 (22 Feb 2019) levels.

MARKET OUTLOOK

After surging (+100 pts in Dec and +210 pts from 2M low at 1452), KLCI is likely to engage in short term consolidation mode ahead of a third and final vote to pass the government's 2021 budget today. Nevertheless, we opine that the traditional Dec window dressing (average +3.8% return from 1990-2019 with a 87% successful hit rate) and continued migration from pandemic-themed to economic recovery proxies could cushion near term sharp correction with key supports at 1618-1638-1650 levels.

Source: Hong Leong Investment Bank Research - 15 Dec 2020