MARKET REVIEW

Global. Despite a rebound in SHCOMP (+1.1%) and HSI (+1%) in anticipation that Beijing will relax policies to prevent a fast-decelerating economy, most Asian markets still ended mixed, weighed down by skyrocketing inflations in the US and China that could strengthen the near-term case for an acceleration of Fed policy normalisation. The S&P 500 ticked up 3 pts to 4649 whilst the Nasdaq gained 47 pts to 16032, led by a jump in materials on rising commodity prices and a chip-fuelled climb in tech. Meanwhile, the Dow fell 158 pts to 35921, as the market responded to surging Oct CPI in three decades and a 6% slide in Disney as earnings fell short of expectations amid slowing Disney+ subscriber growth.

Malaysia. KLCI eased 1.9 pts at 1518.9 to record its 3rd consecutive decline, driven by selling pressures on selected blue chips such as PMETAL, SIMEPLT, PETDAG, DIGI, TM and HARTA, with nagging concerns over Budget 2022 tax woes, runaway inflation and supply bottlenecks coupled with the upcoming Melaka elections. Market breadth stayed bearish but the G/L ratio improved to 0.90 from 0.85 on Wednesday. Turnover reduced 12% to 3.02bn shares valued at RM2.24bn.

TECHNICAL OUTLOOK: KLCI

In the absence of fresh catalysts and budget headwinds, KLCI recorded its 3rd straight loss (-1.9 pts to 1518.9) after hovering within 1517.7-1522.7 levels. In the short term, severe downside seems limited (key supports: 1500-1515) amid grossly oversold technical indicators. Any rebound in the near term is likely going to be capped at the 1545-1560 gap recorded on 1 Nov.

MARKET OUTLOOK

Ahead of the 3Q21 GDP release today and Wall St’s overbought consolidation, KLCI would continue its sideways consolidation (key supports: 1500-1515 zones) as investors continue to assess the Budget 2022 tax woes, ongoing Nov results season, as well as closely monitor 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, underpinned 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), firm commodity prices, as well as expectations of the year-end window dressing activities.

Source: Hong Leong Investment Bank Research - 12 Nov 2021