MARKET REVIEW

Global. Asian bourses ended mixed as investors weighed the risk of a quicker tapering by Fed and heightened concerns over a surge of the Covid-19 infections which has led to a full lockdown in Austria and curbs in the Netherlands and Germany. The Dow added 0.55% to 35813, led by gains in O&G (oil price rebounded as traders viewed Biden’s strategic oil reserves release as less than market expectation) and banks (bond yields rose 0.04% to 1.67%). On the flip side, the Nasdaq fell 0.5% to 16306 as traders started to price in a ramp-up in tapering bond purchases by the Fed and the potential for a June lift-off on rate hikes amid elevated inflation.

Malaysia. The KLCI lost 4 pts to 1522.9 after hovering between 1521.5 and 1531.7 with investors being cautious ahead of the peak of corporate earnings and renewed Covid-19 concerns amid rising infections and R-naught recently. Market breadth turned negative as 641 losers outnumbered 330 gainers. Total turnover inched up to 2.70bn shares worth RM2.35bn from Monday’s 2.45bn shares worth RM1.99bn.

TECHNICAL OUTLOOK: KLCI

After hovering at 1516-1538 levels in the last two weeks, KLCI may continue its sideways pattern during the peak of reporting season. Any residual strength from an 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, crucial supports are pegged at 1500-1515 zones, supported by grossly oversold technical indicators.

MARKET OUTLOOK

As we enter the peak of the reporting season and renewed Covid-19 concerns due to rising local Covid-19 cases and R-naught, we expect the KLCI to trend sideways for the time being (stiff resistances: 1545-1560) on lack of fresh catalysts. Nevertheless, the downside risk appears limited at the moment (key supports: 1500-1515 zones), supported by grossly oversold indicators, aggressive economic reopening activities, high vaccination rate and expectations of a Dec window dressing activities.

Source: Hong Leong Investment Bank Research - 24 Nov 2021