MARKET REVIEW

Global. Tracking a streak of record highs in the US markets, the MSCI Asia ex-Japan reduced its earlier gains to +2.1 pts at 649.4, as investors awaited the key US PPI and CPI data coupled with lingering concerns of slowing China economy. Following multi-day of record highs, the Dow slid as much as 259 pts before ending -112 pts at 36320, as investors weighed on the Oct PPI data (+0.6% MoM; in line with consensus) before the key Oct CPI release tonight. Meanwhile, the Nasdaq slid 0.7% to 16220, dragged by a 12% slump on Tesla in anticipation that Elon Musk may offload 10% of his stake in a recent Twitter poll.

Malaysia. KLCI tumbled 11.4 pts to 1524 amid nagging concerns of the one-off prosperity tax and higher stamp duty rate impact, ongoing Nov reporting season as well as weighed on the statement by Zafrul that the government is considering medium term options to reduce the reliance on direct taxes and to widen the revenue base including shifting to a consumption tax base. Market breadth was bearish as the losers thumped the gainers by 653-to-311 stocks, with a mildly higher turnover at 3.11bn shares worth RM2.39bn.

TECHNICAL OUTLOOK: KLCI

In the absence of fresh catalysts, KLCI ended 11.4 pts lower at 1524, below the intraday low of 1526 support on 1 Nov. Unless swiftly refilling 1545-1560 gap recorded on 1 Nov, the benchmark will stay trapped in a range bound consolidation mode, with crucial downside supports pegged at 1500-1515 territory.

MARKET OUTLOOK

Ahead of the 3Q21 GDP release (on 12 Nov), KLCI could remain choppy (key supports: 1483-1500-1515 zones) as investors continue to assess the repercussions from the one-off prosperity tax and higher stamp duty rate, Nov reporting season, as well as closely monitoring the Malacca state election on 20 Nov, as the outcome will affect the position of the current government and its prospects in the next GE15.

Nevertheless, as technical indicators are grossly oversold, KLCI may stage a technical rebound (resistances: 1545-1562-1570) in the coming days, boosted by the aggressive economic reopening activities with more states are moving to phase 4 of NRP, high vaccination rate (75% of the total population fully vaccinated on 9 Nov) and firm commodity prices.

Source: Hong Leong Investment Bank Research - 10 Nov 2021