MARKET REVIEW

Global. Asian markets ended mixed as investors assessed an uncertain global economic outlook as more countries imposed restrictive measures to combat the tidal wave of Omicron infections, expectations of China’s fiscal stimulus in early 2022 to spur the slowing economy, as well as the high profile central banks’ meetings this week, including the Fed (15-16 Dec), the BOJ (16-17 Dec) and the ECB (16 Dec). Ahead of the FOMC meeting (expected to fasten taper tantrum and raise interest rates in 2022 to curb inflation), the Dow plunged 320 pts to 35650 as investors wrestled with concerns about Omicron variant spread in parts of Europe, causing full and partial lockdowns.

Malaysia. After plunging 110 pts in eight consecutive weeks, KLCI jumped as much as 13 pts to 1501.9 before paring its gains to 6 pts at 1494.9, as investors weighed on the key FOMC meeting and persistent foreign institutions’ liquidations (-RM1.03bn in the last ten consecutive days). Market breadth was positive as 491 gainers outnumbered 386 losers, while turnover was 2.63bn shares valued at RM1.85bn.

TECHNICAL OUTLOOK: KLCI

Following the 115-pt rout from 1613 (20 Oct high) to 1494 yesterday, the index is trying to form a double bottom near 1452-1483 territory ahead of the potential year-end window dressing activities. Upon a successful overhead resistance breakout above 1500-1515 levels, the index may creep higher to retest the more formidable 1538-1545-1560 hurdles. On the flipside, failure to defend the 13M low at 1483 (6 Dec) may see the index heading lower towards 1452 (a 2-year low).

MARKET OUTLOOK

On the back of cautious sentiment ahead of the FOMC meeting, Omicron variant uncertainty (more time is needed to understand details such as the effectiveness of vaccines and severity of disease), persistent foreigners’ liquidations, as well as the “market unfriendly” taxes in Budget 2022, KLCI is expected to remain choppy. Nevertheless, the benchmark may probably regain its footing in the coming days (supports: 1452-1483; resistances: 1500-1520) amid steeply oversold indicators and a possible double-bottom formation pattern, ahead of potential year-end window-dressing activities.

Source: Hong Leong Investment Bank Research - 14 Dec 2021