MARKET REVIEW

Global. Asian markets recouped most of the Monday’s rout, cheered by subsiding Omicron fears, upbeat China’s trade data, as well as the reduction in China’s reserve requirement ratio (RRR) and easing of the real-estate sector curbs to shore up a slowing economy. Ahead of the key US CPI data on Friday, Wall St (Dow: +1.4% at 35719; S&P500: +2% at 4685; Nasdaq: +3% at 16325) ended sharply higher for a 2nd session amid easing Omicron worries and the Chinese stimulus coupled with optimism that the US debt ceiling will be raised before the mid-Dec dateline (after Republicans and Democrats have agreed on a plan to break an impasse), overshadowed the expectations that the Fed will to deliver swifter policy tightening when it meets on 13-14 Dec.

Malaysia. Tracking the rallies from Wall St and regional markets, KLCI advanced 14.5 pts to end at 1497.97, recovering almost 80% of Monday’s 18.3-pt rout amid bargain hunting activities on selected banking, telcos and O&G heavyweights in anticipation of the Dec window-dressing activities. Sentiment turned bullish as 645 gainers outpaced 320 losers, while turnover surged to 4.29bn shares valued at RM2.24bn.

TECHNICAL OUTLOOK: KLCI

Despite a timely 14.5-pt oversold rebound yesterday after diving almost 130 pts from recent high of 1613 on 6 Dec, the bears are likely to stay for a while unless the index can swiftly reclaim above immediate overhead resistances at 1500-1516 zones. A successful breakout will drive the benchmark higher to refill the 1545-1560 gap (1 Nov), ahead of the seasonally stronger Dec window-dressing period. On the flip side, a decisive breakdown below 13M low at 1483 may see the index drifting lower towards 1452 (a 2-year low).

MARKET OUTLOOK

Tracking overnight bullish Wall St performance amid optimism that the Omicron variant will not derail the global recovery (although more time is needed to understand more details such as the effectiveness of vaccines and severity of disease ), KLCI is expected to continue its oversold rebound albeit in a choppy move, underpinned by the expectations of year end window-dressing event. We suggest investors accumulate high potential window dressed companies such as TM (BUY-TP RM7.93), TENAGA (BUY-TP RM13.60), KLK (BUY-TP RM25.62), MAYBANK (BUY-TP RM9.40) and PCHEM (BUY-TP RM10.90). However, any rebound may be capped near 1516-1540-1560 barriers given the resumption in foreign institutions’ liquidations, Fed’s hawkish tilt as well as the “market unfriendly” measures in Budget 2022 – Prosperity Tax and stamp duty hike.

Source: Hong Leong Investment Bank Research - 8 Dec 2021