MARKET REVIEW

Global. Asian markets ended mostly up as investors were optimistic that a Democrat sweep of the political trifecta (i.e. the White House, Senate and the House of Representatives) will give Biden a smoother path for more stimulus measures, over-rode a tumultuous invasion of Capitol Hill on Wednesday. The Dow rallied 211 pts to a fresh record high at 31041, as expectations that Democrats will target further fiscal stimulus, overshadowed rising political tensions as pressure mounts on lawmakers to remove Trump from office in the wake of Wednesday's riot on Capitol Hill.

Malaysia. KLCI tumbled as much as 19.4 pts to 1572.6 as sentiment was dampened by the resumption of RSS and the recent worsening trend in local COVID-19 transmissions to record highs will force targeted MCO restrictions and derail economic recovery momentum. However, the benchmark staged an eleventh-hour rebound to end 11 pts higher at 1603, with bargain hunting on recently bashed-down glove, banking and telco stocks. Market breadth remained bearish as losers thumped gainers by 889-359 whilst a total of 6.5bn securities were traded for RM5.0bn.

TECHNICAL OUTLOOK: KLCI

KLCI’s encouraging closing yesterday suggests that the bulls have not given up just yet, after reclaiming above the 50D SMA as well as the 1600 psychological level to form a hammer candlestick, which can be deemed as positive for a potential downtrend reversal. To have the bull market back in full force, it needs to clear the key 1618 resistance before continuing its northbound journey towards and 1638 (23.6% FR)-1667 (200W SMA) levels. On the flipside, a breakdown below 1574 (50% FR) may trigger more selloff towards 1562 (30 Nov low) and 1545 (61.8% FR) levels.

MARKET OUTLOOK

Despite an eleventh-hour rebound to end 11 pts higher at 1603 yesterday, KLCI may continue to remain highly volatile (supports: 1562-1575; resistances 1618-1638), as the recent significant spike in local COVID-19 cases and clusters may force government to institute further targeted MCO restrictions before there are more serious repercussions on the rakyat and economy nationwide.

On stocks selection, the WHO’s warning of a tipping point in the fight against the coronavirus pandemic, amid growing fears over more infectious variants of the virus (discovered in the UK and South Africa) may bode well for more sustainable trading interests on glove stocks, after staging a relief rally in the last two days. Technically, CAREPLS (not-rated; Technical TP RM2.68) and RUBEREX (not-rated; Technical TP RM1.72) have crossed the bullish 200D SMA resistance whilst TOPGLOV (HLIB BUYRM10.54 TP; Technical TP RM6.90), SUPERMX (Not-rated; Technical TP RM7.20) and COMFORT (Not-rated, Technical TP RM3.60) are in the midst of staging impending crossovers. Meanwhile, MAHSING (HLIB BUY-RM1.41 TP; Technical TP RM0.95), KAREX (HLIB BUY-RM1.19 TP; Technical TP RM0.88), KOSSAN (HLIB BUY-RM7.80; Technical TP RM4.83) and HARTA (HLIB BUY-RM18.35 TP; Technical TP RM12.30) are eying a 20D/50D SMA breakout for further price appreciations.

Source: Hong Leong Investment Bank Research - 8 Jan 2021