MARKET REVIEW

Global. Asian markets rose last Friday on optimism Beijing will ease regulatory curbs to shore up its slowing economy as well as positive expectations that the Biden-Xi virtual summit tonight will ease heightened tensions between the world's two superpowers. After plunging 510 pts in the last three days, the Dow staged a 179-pt rebound to 36100 last Friday, spurred by technology and communication services megacap stocks such as Apple and Microsoft, overshadowed a 10Y low in the preliminary Nov consumer sentiment reading at 66.8. After enjoying five consecutive weekly gains, the Dow retreated 229 pts WoW after hitting an all-time high of 36565 on 8 Nov, as investors were wary over the market’s vulnerability to surging inflation, tighter Fed’s policy, and moderating corporate profit growth.

Malaysia. After falling 16.6 pts in three consecutive sessions, KLCI staged a 12.4-pt oversold rebound to 1531.2 pts (-0.5-pt WoW), underpinned by bargain hunting activities in selected banking and battered glove stocks, coupled with positive BNM outlook that Malaysia’s economic growth will accelerate in the 4Q21 and 2022 (from -4.5% in 3Q21) as economic reopening gained traction. The broader market was positive as advancers 521 outpaced decliners 414, while turnover rose to 3.11bn units valued at RM2.62bn from Thursday’s 3.02bn shares worth RM2.24bn.

TECHNICAL OUTLOOK: KLCI

Despite the 12.4 pts rebound last Friday, near term KLCI outlook remains negative unless the benchmark can break above the key 1545-1560 resistance successfully. Clearing these hurdles will spur the index towards 1568-1576-1590 territory. On the flip side, severe downside seems limited at 1500-1515 zones amid grossly oversold technical indicators.

MARKET OUTLOOK

In spite of the 12.4 pts rebound last Friday, KLCI would continue its sideways consolidation (stiff resistances: 1545-1560) given the lack of domestic positive catalysts to lift sentiment ahead of the Melaka state polls (20 Nov) and ongoing Nov results season. Nevertheless, the downside risk is limited (key supports: 1500-1515 zones), supported by grossly oversold indicators, 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 14 Nov), the reopening of KLIA and Changi Airport (29 Nov) and firm commodity prices.

Source: Hong Leong Investment Bank Research - 15 Nov 2021