MARKET REVIEW

Global. The MSCI Asia ex-Japan eased 1.5 pts to 647 amid concerns of virus resurgence in Europe, raging inflation and the Fed could accelerate the drawdown of its bond-buying program. The Dow rallied as much as 328 pts in early trades as Powell’s re-nomination was welcomed as a signal of stability by investors. However, the gains were reduced to +17 pts at 35619 whilst the Nasdaq sank 202 pts to 15855 in anticipation of earlier rate hikes and heightened worries over Covid-19 comeback that may threaten US economic recovery.

Malaysia. KLCI gained as much as 3.8 pts in early trade as it responded favourably to BN’s landslide victory in the Melaka polls. However, the early gains were cut to +1.3 pts at 1526.9 amid ongoing results season and a retreat in crude oil prices. Market sentiment turned negative again as 569 losers outnumbered 373 gainers. Total turnover fell further to 2.45bn shares worth RM1.99bn from last Friday’s 2.67bn shares valued at RM2bn.

TECHNICAL OUTLOOK: KLCI

After hovering at 1516-1538 levels in the last two weeks, KLCI may continue its sideways pattern for the rest of the week. Any residual strength from the current oversold rebound is likely to face stiff barriers at 1545-1560 (1 Nov gap) levels. 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

Tracking elevated inflation worries and more lockdowns in Europe due to a resurgence in Covid-19 cases, we expect the KLCI would continue its sideways consolidation mode for the time being (stiff resistances: 1545-1560) during the peak of 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 resounding victory in Melaka polls (will embolden the coalition and PM as they prepare for GE15 next year).

VIRTUAL PORTFOLIO POSITION-FIG1

In the wake of the market uncertainty, we took profit on PHARMA (6.9% gain) and squared off TENAGA (1.5% loss) due to expiry.

Source: Hong Leong Investment Bank Research - 23 Nov 2021