MARKET REVIEW

Global. Asian market ended mostly higher as sentiment was boosted by promising vaccines news (from Pfizer, Moderna and Novavax), China’s recent stimulus measures to kick-start slowing economy and potential Congress approval of Biden's Build Back Better economic plan in Jan, overshadowed fears of the highly contagious Omicron variant, surging inflation and the end of ultra-easy monetary policy. Ahead of the extended Christmas holidays (Wall St will be closed on 24 Dec), the Dow surged 261 pts or 0.74% at 35753, after upbeat US economic data (eg Dec consumer confidence, Nov home sales and 3Q21 GDP) and hopeful developments about the severity of the Omicron coronavirus variant after more and more evidence is building that the strain is potentially less severe than prior strains, specifically Delta.

Malaysia. Tracking bullish Wall St performance overnight and renewed buying interest from foreign institutions (+RM64m after net selling RM1.5bn for the past 15 consecutive sessions), KLCI ended +7.7 pts to 1500.3, supported by oversold rebound in selected heavyweights such as TOPGLOV, HARTA, and TENAGA. Market breadth turned positive as 450 gainers edged 347 losers, while total turnover surged to 3.12bn shares but value remain flat at RM1.59bn (2nd lowest YTD).

TECHNICAL OUTLOOK: KLCI

After plunging 8.55% or 138 pts to a low at 1475 on 15 Dec, KLCI had rebounded to 1500 yesterday. If KLCI is able to sustain the positive momentum to reclaim strongly above immediate key 1515 levels, 1528-1544-1557 barriers may be the next cards. On the flip side, failure to do so will indicate further consolidation at 1452-1475 supports.

MARKET OUTLOOK

Despite recent headwinds of resurgence in Covid-19 cases worldwide owing to the high transmissible Omicron strain, Fed’s hawkish tilt policy, elusive fiscal stimulus and persist foreigners’ liquidations (-RM1.22bn in Dec after net inflows of RM3.6bn from Aug-Nov) as well as assessing the potential impact on sector/corporates after Malaysia experienced widespread flooding in many states in Peninsular Malaysia, KLCI may witness an oversold rebound, driven by potential window-dressing activities (registering an average return of 3.6% in 26 of the past 30 years in Dec). Key supports are pegged at 1452-1475 whilst resistances are situated near 1515-1528-1544 levels.

Source: Hong Leong Investment Bank Research - 23 Dec 2021