MARKET REVIEW

Global. Asian markets ended mixed as investors assessed the recent strong batch of US economic data, a more hawkish Fed stance and surging Covid -19 infections and restrictions in Europe. Wall St was closed overnight due to the Thanksgiving holiday. Ahead of the half-day trading session on 26 Nov, the US markets are expected to remain tepid as investors digest how is the latest batch of economic data would impact the Fed's timeline for tapering bond purchases and raising interest rates if high inflation persists.

Malaysia. The KLCI weakened 4.6 pts at 1517.6 yesterday to record its 3rd straight decline as investors continue to adopt a cautious tone at the peak of corporate earnings season concerns and renewed foreign selling in the last five consecutive sessions (net sold RM205m). On the broader market, decliners trounced gainers 712 to 302 while turnover increased to 3.81bn shares worth RM2.42bn from Wednesday's 3.04bn units valued at RM2.09bn.

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. On the flip side, a decisive breakdown below the critical 1500-1515 support will trigger further selldown towards 1483 (52-week low) and 1452 (2Y low).

MARKET OUTLOOK

On the back of the ongoing peak results season and rising local Covid-19 infections coupled with renewed foreign selling activities, KLCI is expected to extend its consolidation near 1500-1515 levels. 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 - 26 Nov 2021