MARKET REVIEW

Global. Asian markets rose in early trades following upbeat Oct retail sales and industrial output reports from China. However, most markets pared the early gains ahead of the closely watched Biden-Xi virtual summit. Prior to the release of US Oct retail sales and key retailers’ corporate earnings reports this week, the Dow eased 13 pts to 36087 as investors weighed on the recent surging inflation and sluggish consumer sentiment data against Biden’s final approval of his USD1 trillion infrastructure deal yesterday.

Malaysia. KLCI surrendered 8.9pts of last Friday’s 12.4-pt rebound to close at 1522.3, led by profit taking in telco, plantation and banking stocks ahead of the Melaka polls (20 Nov) and ongoing 3Q21 results season. The broader market was negative as 656 losers thumped 361 gainers, while turnover rose to 3.48bn units valued at RM2.33bn from Friday’s 3.11bn shares worth RM2.62bn.

TECHNICAL OUTLOOK: KLCI

We reiterate our view that KLCI will stuck in near term consolidation mode 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

Against a backdrop of negative market breadth in 8 of the last 10 days coupled with persistent net selling from domestic institutions (5D: -RM349m) while both the local retailers (5D: +RM55m) and foreigner (5D: +293m) remained net buyers, we expect the KLCI would probably stay into a consolidation mode for the time being (stiff resistances: 1545-1560), 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 15 Nov), the reopening of KLIA and Changi Airport (29 Nov) and firm commodity prices.

Source: Hong Leong Investment Bank Research - 16 Nov 2021