MARKET REVIEW

Global. Asian markets ended mixed as investors were buffeted by a step-up in US Treasury yields as well as volatile oil prices in the face of price-cooling moves by the US from its strategic reserves in coordination with China, India, South Korea, Japan and Britain. Overnight, the Dow fell 9 pts to 35804 after sliding as much as 222 pts at 35591 as investors digested the Nov FOMC minutes that the Fed would be open to speed up the elimination of the tapering and move more quickly to raise interest rates if high inflation persists, against falling weekly jobless claims (to a 52-year low) and an upbeat Nov consumer sentiment index.

Malaysia. The KLCI eased 0.61-pt lower to 1522.2 after hovering at 1521-1526 intraday as investors continue to adopt a cautious tone ahead of the peak of corporate earnings and renewed Covid-19 concerns amid rising infections and R-naught recently. Despite total turnover increased back to 3bn levels (previous: 2.7bn), market breadth continued to be negative as 501 losers outnumbered 402 gainers.

TECHNICAL OUTLOOK: KLCI

After building a strong base at 1516-1538 levels in the last three weeks, the KLCI may begin its upward momentum soon (resistance: 1545-1560 gap on 1 Nov) in anticipation of the year-end window dressing activities, underpinned by a potential golden cross in MACD indicator. Clearing these hurdles successfully will lift the index towards 1568-1576-1590 territory.

MARKET OUTLOOK

Without any fresh catalyst and ahead of the upcoming Sawarak elections on 18 Dec, KLCI is expected to establish a base near 1500-1515 levels in the near term. That said, in anticipation of Dec window-dressing activities, coupled with aggressive economic reopening activities and a high vaccination rate, KLCI may grind higher to refill the 1545- 1560 gap in December. With the finding that 18 out of 21 times (2000-2020) KLCI registered a positive return in December, we suggest investors accumulate high potential window-dressed companies such as TM (BUY-TP RM7.93), KLK (BUY-TP RM25.62), MAYBANK (BUY-TP RM9.40) and PCHEM (BUY-TP RM10.90).

Source: Hong Leong Investment Bank Research - 25 Nov 2021