MARKET REVIEW

Global. The MSCI Asia ex-Japan index fell 4.4 pts to 625.2 as markets wavered amid caution over economic risks from the Omicron strain and bets on less accommodative policy from the central banks to curb elevated inflation amid the high profile central banks’ meetings this week, including the Fed (15-16 Dec), the BOJ (16-17 Dec) and the ECB (16 Dec). On the back of bullish Nov PPI data (+0.8% MoM vs consensus +0.5%) and lingering worries about the economic threats from Omicron, the Dow slipped as much as 210 pts before paring the losses to 107 pts at 35544, as sentiment remained cautious ahead of the highly anticipated FOMC meeting (widely expected to fasten taper tantrum and a quicker start to rates hike in 2022).

Malaysia. Tracking the sluggish Dow and regional markets, KLCI tumbled 13.9 pts to 1480.9, as investors weighed the FOMC meeting on 15-16 Dec and persistent foreign institutions’ liquidations (-RM1.19bn in the last ten consecutive days). Market breadth was bearish as 609 losers thumped 279 gainers, while turnover was 2.68bn shares valued at RM1.78bn (the 3rd lowest YTD).

TECHNICAL OUTLOOK: KLCI

Following the fresh breakdown below the 1483 (13M low on 6 Dec) yesterday, the index is poised to retest 1452 (2 Nov 2020 low) in the coming days before staging an oversold rebound. If the bulls can manage to hold off the current onslaught, then a bounce back up to 1494-1500-1515 may be next on the cards. On the flipside, failure to defend the 1452 support may witness further rout towards 1400-1430 levels.

MARKET OUTLOOK

Volatility will remain elevated throughout this week’s rate decisions from the Fed and ECB, 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. Nevertheless, the benchmark may probably regain its footing in the coming days (supports: 1430-1452; resistances: 1490- 1500-1515) amid steeply oversold indicators, ahead of potential year-end window-dressing activities.

Source: Hong Leong Investment Bank Research - 15 Dec 2021