MARKET REVIEW

Global. Asian markets were mixed as resurgence in the Covid-19 outbreak in China added to worries about slowing growth in the world's 2nd biggest economy already struggling with a power crunch and crisis in its real-estate sector. Ahead of a slew of major megacap companies’ results this week, the Dow rose as much as 110 pts to an all-time high of 35787 before paring its gains to 64 pts at 35741, driven by bullish 3Q21 results season (~80% beat estimates based on reported results of the S&P 500 companies) as companies navigating supply-chain bottlenecks, labour shortages and inflationary pressures to sustain growth (consensus expects S&P 500 companies to grow 34% YoY).

Malaysia. Ahead of the upcoming Budget 2022 presentation on Friday, KLCI ended flat at 1587.9 after hovering within a tight 1586.8-1593.4 band. Market breadth was negative as G/L ratio fell for the 4th straight session to 0.80. Trade flows wise, local institutions remained as net sellers (-RM89m; 5D: -RM751m) for the 14th consecutive days. Meanwhile, foreigners and retailers continued to be net buyers, recording net buying trades of RM53m (5D: +RM640m) and RM36m (5D: +RM111m), respectively.

TECHNICAL OUTLOOK: KLCI

In the absence of positive vibes to stir further buying interest coupled with the existence of negative technical signals after sitting on cumulative gains of 75 pts since its run-up from a low of 1515 (5 Oct), KLCI is likely to extend its overbought consolidation this week. Stiff resistances are pegged at 1600-1613-1623 zones whilst key supports are situated at 1560- 1573 territory.

MARKET OUTLOOK

Ahead of the upcoming Budget 2022 presentation on Friday, profit-taking temptations may continue to prevail on the Bursa Malaysia in the absence of fresh buying catalysts after rallying from 1515 low. Nevertheless, severe downside risk is cushioned (supports: 1560- 1573; resistances: 1600-1613) by economic reopening activities with more states are moving to phase 3 & 4 of NRP, falling Covid-19 cases (to 4M low at 4782 on 25 Oct), high vaccination rate (95% of the adults had fully vaccinated on 25 Oct), continuous net foreign buying interests and riding on firm commodity prices.

Source: Hong Leong Investment Bank Research - 26 Oct 2021