MARKET REVIEW

Asia/US. Asian markets ended mixed as investors were digesting (i) the higher US University of Michigan 1Y/5Y inflation expectations and Sep core CPI data, (ii) President Xi’s speech at the National Congress to commit the zero-COVID policy, a more regulated and more state-led developers in the real estate sector, and further support for the sector to achieve tech self-reliance, and (iii) Xi’s fiery rhetoric for Taiwan’s reunification. After surging 1.2% WoW, Dow surged 551 pts overnight to 30,186, boosted by upbeat earnings from the Bank of America and Bank of New York Mellon (other key earnings results scheduled this week are Goldman Sachs, Netflix, Tesla, J&J as well as P&G ), as well as the reversal of nearly all the proposed tax cuts and walk back an energy subsidy from the newly appointed UK Finance Minister. On economic front, the New York Fed’s October Empire Manufacturing survey fell more than expected to -9.1 (its 3rd consecutive contraction).

Malaysia. Tracking sluggish regional markets, KLCI fluctuated between 1376.8 (-5.8 pts) and 1389.2 (+6.7 pts) before finishing at 1386.3 (+3.8 pts), underpinned by buying supports in selected banking, telco and gloves heavyweights. Despite the gains, market breadth deteriorated to 0.82 from 1.44 last Friday and buying momentum also eased further, with trading valued dropped 12% to RM1.49bn (average trading value Sep: RM1.8bn; 3Q: RM1.6bn). Foreigners logged net outflows of RM53m (Oct: -RM863m, Sep: -RM1.63bn) whilst the local retail and institutional investors were major net buyers with RM10m (Oct: +RM57m, Sep: +RM452m) and RM43m (Oct: +RM806m, Sep: +RM1.17bn) shares, respectively.

TECHNICAL OUTLOOK: KLCI

After sliding 15.3% from YTD high of 1,620 to a low of 1,373, KLCI is creeping upward to end at 1,386.3 yesterday. As technical indicators are on the mend, KLCI may stage an oversold rebound in the short term but it is likely to be capped near 1,400 -1,410-1,436 levels. Conversely, key supports are situated at 1,348-1,363-1,373 zones.

MARKET OUTLOOK

Overnight rally from Wall St may bode well for the local bourse today to record its 3rd day of technical rebound towards the 1,400-1,410 hurdles (support: 1,348-1,363-1,373). With capital preservation as the key in the wake of external and internal headwinds, we continue to advocate investors to seek refuge in banks, telcos, utilities, consumer, healthcare, autos and construction sectors, in anticipation that the new government post GE15 will continue to be highly supportive of domestic consumption.

Source: Hong Leong Investment Bank Research - 18 Oct 2022