MARKET REVIEW

Global. Tracking overnight rally on Wall St, most Asian markets ended higher, fuelled by earnings optimism despite the worsening Covid-19 situation in China. Overnight, the Dow jumped as much as 117 pts to an all-time high of 35,893 before paring the gains to 16 pts at 35756, dragged down by a dismal Facebook results as it warned that Apple Inc.’s new privacy weight on its digital business.

Malaysia. Bucking higher regional markets, KLCI edged down 3.7 pts to 1584.2, led by intensified selling pressures from the healthcare and energy heavyweights. Market breadth remains negative as G/L ratio fell for the 5th straight session to 0.71. Trade flows wise, foreigners turned into net sellers (-RM12m; 5D: +RM391m) after 13th consecutive days of net buying whilst the local institutions (-RM52m; 5D: -RM597m) continued their net outflow for the 15th straight session. On the other hand, retailers were the only net buyers, logging net buying flows of RM64m (5D: +RM196m).

TECHNICAL OUTLOOK: KLCI

In the absence of positive catalysts to capture 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 vibes after rallying from 1515 low. Nevertheless, severe downside risk is cushioned (supports: 1560-1573; resistances: 1600-1613) by aggressive 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 26 Oct) and riding on firm commodity prices.

Virtual Portfolio- Fig 1

In the absence of positive vibes to stir further buying interest, we decided to square off WONG (+7.3%) to reduce market exposure risk.

Source: Hong Leong Investment Bank Research - 27 Oct 2021