MARKET REVIEW

Asia/US. Asian markets surged in early trades, thanks to a WSJ report last Friday saying that the Fed may implement a smaller rate hike at the 14 Dec meeting. However, most markets ended off intraday highs amid major swoon in HSI (-6.3%) and SHCOMP (-2%) bourses, as markets fretted the mixed Chinese economic data and mounting fears that President Xi will double down on ideology-driven policies at the cost of economic growth after strengthening its power grip in the Politburo Standing Committee line-up. After rallying 680 pts or 4.9% WoW, the Dow jumped 417 pts at 31,499 overnight as investors look ahead to a busy week of corporate earnings (i.e. Meta Platforms, Alphabet, Microsoft, 3M, Coca-Cola, GE, McDonald’s, Apple, Intel, Honeywell etc) and economic data (3Q22 GDP, Sep core PCE deflator etc). Overall, investors welcomed a report from the WSJ last week that hinted some Fed officials are concerned about over-tightening and should start discussing the potential of a smaller rate hike in Dec, underpinned by the worsening contractions in the Sep S&P global US manufacturing and services PMI prints.

Malaysia. Following more clarity on the GE15’s nomination (5 Nov) and election (19 Nov) dates, easing Sep headline CPI and persistent buying supports from local funds, KLCI soared 8.4 pts to 1,446.4 last Friday. WoW, KLCI surged 64 pts or 4.6%, supported by a 6.2% jump in average daily turnover value to RM1.8bn. On weekly funds flow, foreigners (- RM68m, Oct: -RM887m, Sep:-RM1.63bn) and retail (-RM81m, Oct:-RM34m, Sep: +RM452m) investors were net sellers whilst the local institutional investors turned net buyers (+RM149m, Oct: +RM912m, Sep: +RM1.17bn).

TECHNICAL OUTLOOK: KLCI

On the back of bullish MACD/RSI readings and a bullish close above 10D/20D/30D MAs, KLCI could stage further residual rebound towards formidable barriers near 1,454 -1,468 levels before profit taking activities resurface. Meanwhile, key supports are pegged at 1,400-1,427 zones.

MARKET OUTLOOK

After last week’s rally, KLCI’s rebound still have legs amid bullish MACD and RSI indicators coupled with Wall St relief rally. However, profit taking may cap gains near 1,454-1,468 hurdles (support: 1,400-1,427) after soaring 73 pts in six days, reflected by the steeply overbought stochastic reading coupled with prevalent headwinds including (i) global recession fears, (ii) elevated interest rates and inflation uncertainty, (iii) heightened US China geopolitical tensions after President Xi’s solidified control over the ruling party, (iv) potential lower guidance for Malaysia corporate earnings and GDP, and (v) GE15 fluidity.

Source: Hong Leong Investment Bank Research - 25 Oct 2022