MARKET REVIEW

Global. Boosted by record highs in the S&P 500 and Nasdaq on robust earnings and expectations that Japan will soon approve a record USD490bn stimulus package, most of the Asian markets closed higher but the gains were capped due to virus resurgence in Europe which could stall the economic recovery at a time when inflation is raging. The Dow tumbled 269 pts to 35601 after hawkish remarks from Fed officials and mounting concern that another wave of the pandemic in Europe could spur more lockdowns. Economically sensitive companies like energy, financial and industrial shares fell, while the technology - heavy Nasdaq 100 outperformed major benchmarks (+90 pts to 16573).

Malaysia. Ahead of the closely watched Melaka polls, KLCI inched up 1.8 pts to 1525.5 in a tight range trade at 1523.1-1527.5 levels, led by telco and banking stocks. Market sentiment turned positive as 474 gainers edged 450 losers after four days of negative market breadth. Total turnover fell further to 2.67bn shares worth RM2bn from Thursday’s 2.81bn shares valued at RM2.1bn.

TECHNICAL OUTLOOK: KLCI

After hovering at tight range 1518-1534 levels last week, KLCI may continue its sideways pattern this week. Any residual strength from the current rebound is likely to face stiff 1545- 1560 (1 Nov gap) barriers. Clearing these hurdles successfully 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

In tandem with worries of more lockdowns in Europe due to surging Covid-19 cases, we expect the KLCI would continue its sideways consolidation mode for the time being (stiff resistances: 1545-1560), due to ongoing Nov results season. Nevertheless, the downside risk seems limited (key supports: 1500-1515 zones), supported by grossly oversold indicators, aggressive economic reopening activities, high vaccination rate, the reopening of KLIA and Changi Airport (29 Nov) and BN's overwhelming victory in Melaka (likely embolden the coalition and PM as they prepare for GE15 next year).

Source: Hong Leong Investment Bank Research - 22 Nov 2021