MARKET REVIEW

Global. Ahead of China’s Oct trade data release on 7 Nov (trade surplus surged to a record high of USD84.5bn vs forecasts of USD65.6bn), the MSCI Asia ex Japan index eased 1.9 pts to 645.4 as investors weighed on Fed latest decision that it would be “patient” on interest rate hikes while beginning asset tapering this month. Ahead of the US infrastructure bill resolution (Congress approved the USD1.2 trillion bill late Friday), all three major indices rose to record highs (Dow: +0.56% to 36328; S&P: +0.37% to 4697; Nasdaq: +0.2% to 15972) amid robust Oct jobs data and Pfizer’s claim that its Covid-19 antiviral pill (used with an HIV drug) cut the risk of hospitalisation or death by 89% in high-risk adults who have been exposed to the virus.

Malaysia. KLCI dropped as much as 5.9 pts to 1525.5 as investors continue to assess the repercussions from the one-off prosperity tax and higher stamp duty rate, coupled with the ongoing Nov reporting season. In the final hour, bargain hunting on selected blue chips (i.e. MAXIS, IHH, HAPSENG, DIGI, AXIATA) recouped all of the intraday losses to close +0.4-pt to 1531.7 (-30.6 pts WoW). Market breadth, however remained negative as the losers outpaced the gainers by 582-to-441 stocks. Turnover slipped to 3.15bn shares valued at RM2.32bn from Wednesday’s 3.42bn units worth RM2.35bn.

TECHNICAL OUTLOOK: KLCI

KLCI ended flat (+0.4 pt to 1531.7) after fluctuating within the 1525-1540 levels. We expect KLCI to remain volatile this week as investors continue to assess the repercussions from the prosperity tax and higher stamp duty rate, as well as ongoing Nov reporting season. Stiff hurdles are pegged at 1545-1562 gap (1 Nov) and 1570 (200D MA) whilst crucial downside supports are situated at 1500-1515 territory.

MARKET OUTLOOK

As investors continue to assess the repercussions from the one-off prosperity tax and higher stamp duty rate, coupled with the ongoing Nov reporting season, the overall KLCI trend could remain choppy. Nevertheless, as technical indicators are pointing to grossly oversold levels after falling 5.1% from 1614 high, further downside risk may be cushioned near 1483-1500-1515 zones owing to the aggressive economic reopening activities with more states are moving to phase 3 and 4 of NRP, high vaccination rate (~96% of the adults had fully vaccinated on 5 Nov and sliding positivity rate to 4.7% from a peak of 15.3% ) and firm commodity prices. Stiff hurdles are pegged at 1545-1562 gap (1 Nov).

Source: Hong Leong Investment Bank Research - 8 Nov 2021