MARKET REVIEW

Global. Asian markets ended mixed as investors weighed the concerns of skyrocketing inflation (as China Oct PPI hit a 26-year high) and weakening China economy coupled with more aggressive policy tightening by global central banks. All three US major indices lost ground (Dow:-0.66% to 36080; S&P500: -0.82% to 4646; Nasdaq: -1.44% to 15985) after data showing Oct CPI (+0.9% MoM; +6.2% YoY) surged to the highest levels in 31 years, stoking fresh worries about elevated inflation and sooner-than-expected rate hikes from the Fed.

Malaysia. KLCI eased 3.3 pts to 1520.7, thanks to the selling spree in selected banking, plantations and gloves blue chips amid lingering concerns over the adverse impact from the one-off prosperity tax, higher stamp duty rate, and ongoing Nov reporting season. Market breadth stayed bearish but the G/L ratio rose to 0.85 from 0.48 on Tuesday. Turnover was 3.43bn shares valued at RM2.32bn from Tuesday’s 3.11bn units valued at RM2.39bn.

TECHNICAL OUTLOOK: KLCI

In the absence of fresh catalysts and budget headwinds, KLCI lost 3.3 pts at 1520.7 after hovering within 1516.8-1526.2 levels. The short term downtrend for KLCI is likely to continue (key supports: 1500-1515) unless the index can swiftly refilling the 1545-1560 gap recorded on 1 Nov.

MARKET OUTLOOK

Ahead of the 3Q21 GDP release today and Wall St’s overnight rout, KLCI could remain choppy (key supports: 1483-1500-1515 zones) today as investors continue to assess the Budget tax woes, Nov reporting season, as well as closely monitore the Melaka state polls (20 Nov). Nevertheless, as technical indicators are steeply oversold, KLCI may stage a technical rebound (resistances: 1545-1562) in the coming days, boosted by the aggressive economic reopening activities with more states are moving to phase 4 of NRP, high vaccination rate (~76% of the total population fully vaccinated on 11 Nov), the reopening of KLIA and Changi Airport (29 Nov), and firm commodity prices.

VIRTUAL PORTFOLIO

In the absence of positive vibes to stir further buying interest, we decided to take profit on EVERGRN (4.8% gain) and FLBHD (6.3% gain) to reduce market exposure risk.

Source: Hong Leong Investment Bank Research - 11 Nov 2021