MARKET REVIEW

Global. Asian markets ended mixed, taking cues from a weaker-than-expected US Sep job openings and the start of US 3Q21 results season this week, with key issues like supply chain snags and inflationary pressures taking centre stage. Lifted by a rally in basic material and energy shares on higher oil prices, the Dow jumped as much as 205 pts to 34951. However, the benchmark nose-dived 455 pts from the peak to end 250 pts lower at 34496, as investors focused on the start of the U.S. corporate earnings season this week and lingering concerns about surging inflation and the Fed may scale back stimulus earlier than-expected.

Malaysia. KLCI gained 6.9 pts to 1570.8, registering its 5th straight winning streak, as surging oil prices and interstate resumption lifted sentiment. Turnover jumped to 6.9bn shares worth RM3.9bn from 5bn shares valued at RM3.3bn last Friday. Market breadth turned positive for a 4th day as gainers edged losers by 737-to-401 stocks. Trade flows wise, foreigners were the major net buyers for a 4th consecutive session (+RM131m; 5D: +RM509m) followed by retailers (+RM23m; 5D: -RM26m). Meanwhile, local institutions remained net sellers for the 5th straight session (-RM154m; 5D: -RM483m).

TECHNICAL OUTLOOK: KLCI

Despite profit taking activities after rallying from a low of 1515 to an intraday high of 1576 yesterday, KLCI still managed to end 6.9 pts higher at 1570.8, logging its 5th consecutive gains. Following a strong reclaim above multiple key MAs and bottoming up MACD and RSI technical indicators, we remain optimistic that KLCI may surpass immediate resistance near 1576 (200D MA) after a mild profit taking pullback (reflected by toppish stochastic reading). A successful breakout above 200D MA will spur greater upside to re-challenge 1600-1605 levels. Key supports now are revised upwards to 1530-1544-1558 territory.

MARKET OUTLOOK

On the back of resumption in foreign inflows (~70% correlation between KLCI and foreign shareholding) and economic reopening gaining traction with interstate and overseas travels allowed for the fully vaccinated effective 11 Oct, as well as riding on high commodity prices, KLCI is expected to progress further as market risk appetite returns. Major resistance is pegged at 1576-1600 levels whilst support is situated at 1530-1558 zones.

Source: Hong Leong Investment Bank Research - 12 Oct 2021