MARKET REVIEW

Global. Asian markets drifted lower despite strong US retailers’ results and Oct retail sales data from US and China, as sentiment was dampened by rising calls for central banks to respond with more hawkish monetary policies to curb skyrocketing inflation amid supply chain bottlenecks and labour. The Dow skidded 211 pts to 35931, led by losses in financials and energy as investors weighed a continuation of strong earnings reports from big-box retailers against lingering inflation concerns that could push the Fed to raise interest rates sooner than expected.

Malaysia. KLCI closed +2.24 pts to 1525.1 after erasing losses on last-minute buying in heavyweights i.e. mainly TOPGLOV, PMETAL, PBBANK, KLK, and CIMB. Despite the headlines gain, market sentiment stayed bearish (715 losers vs 260 gainers), against a backdrop of negative market breadth in 9 of the last 10 days, persistent net selling from domestic institutions (5D: -RM395m) while both the local retailers (5D: +RM36m) and foreigner (5D: +359m) remained net buyers.

TECHNICAL OUTLOOK: KLCI

We reiterate our view that KLCI will continue to trend sideways unless the benchmark can break above the key 1545-1560 levels successfully. Clearing these hurdles will lift 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

We expect the KLCI would continue its sideways consolidation mode for the time being (stiff resistances: 1545-1560), ahead of the Melaka state polls (20 Nov) and ongoing Nov results season coupled with the concern of rising R-Naught and Covid-19 cases recently. Nevertheless, the downside risk seems limited (key supports: 1500-1515 zones), supported by grossly oversold indicators, aggressive economic reopening activities with most states are moving to phase 4 of NRP, high vaccination rate (76.3% of the total population fully vaccinated on 17 Nov), the reopening of KLIA and Changi Airport (29 Nov) and firm commodity prices.

Source: Hong Leong Investment Bank Research - 18 Nov 2021