MARKET REVIEW

Global. Ahead of the key US Nov CPI report (consensus: +6.8% YoY) tonight, most Asian markets inched up in cautious mode after recent rally as investors assessed risks surrounding the Omicron variant and China Nov CPI (+2.3% YoY vs consensus 2. 5%) and PPI (+12.9% YoY and consensus 12.4%). Wall St ended lower on profit taking pullback (Dow: -0.1 pt at 35754; S&P500: -33.7 pts at 4667; Nasdaq 100: -244 pts at 16149) as investors weighed on the lower weekly jobless claims ahead of the US Nov CPI data that could intensify Fed’s policy tightening pace during its meeting on 13-14 Dec. Sentiment remained cautious as increased restrictions in parts of the world to contain the spread of the highly contagious Omicron variant tempered investor optimism about the economic recovery.

Malaysia. KLCI ended 7.76 pts higher to 1501.79 at the eleventh hour, lifted by buying interests of selected heavyweights namely AXIATA, PETDAG, MAXIS, DIGI, SIMEPLT and TENAGA. Market breadth was positive for the 3rd day as 458 gainers edged 400 losers, while turnover and value tumbled 27% and 22% to 2.73bn shares valued at RM1.59bn, respectively.

TECHNICAL OUTLOOK: KLCI

Despite its steeply oversold position after sliding 111 pts from 1613 (20 Oct high), the bears are likely to stay for a while unless the index can swiftly reclaim above immediate overhead resistances at 1500-1512 zones. Upon a successful breakout, the index may advance further to 1538-1545-1560 zones in conjunction with the seasonally stronger Dec window dressing month. On the flip side, a decisive breakdown below 13M low at 1483 (6 Dec) may see the index retreating lower towards 1452 (a 2-year low).

MARKET OUTLOOK

On the back of easing fears that the contagious Omicron variant will not derail the global recovery (although more time is needed to understand details such as the effectiveness of vaccines and severity of disease), we remain optimistic that KLCI may start to form a base at 1452-1483 levels prior to an oversold rebound, as the market anchors recovery in anticipation of a possible Dec window-dressing activities. However, any rebound may be capped near 1545-1560 barriers (1 Nov gap) given the resumption in foreign institutions’ liquidations (net sold RM904m in the last 10 days), Fed’s hawkish tilt as well as the “market unfriendly” taxes in Budget 2022.

Source: Hong Leong Investment Bank Research - 10 Dec 2021