MARKET REVIEW

Asia/US. Boosted by the robust rally on Wall St last Friday, Asian markets were mostly up as investors bets on the Fed's possible downshift in future size of rate hikes post Nov FOMC meeting. Nevertheless, China and Hong Kong markets bucked the positive tone to continue their losing streaks after China's Oct manufacturing and non-manufacturing PMIs fell to 49.2 (Sept: 50.1) and 48.7 (Sept: 50.6), respectively. After surging 2,528 pts in six days, the Dow lost 128 pts to 32,733 as investors await the FOMC outcome on 2 Nov (expected to raise rates by 75 bps) and will parse through statements from Fed officials for any clues as to the future course of rate hikes. Other key economic events slated for this week are Oct jobs data (4 Nov) and Oct ISM manufacturing (1 Nov) and services (3 Nov) sectors reports.

Malaysia. Tracking US and regional markets’ rally, KLCI jumped 13 pts at 1,460.3, lifted by selected banking, oil and gas, and telco heavyweights. Market breadth turned positive as the (G/L) ratio strengthened to 1.23 from 0.87 a day ago. Local institution returned as net buyers (+RM31m, Oct: +RM743m, Sep: +RM1.17bn) after net selling RM200m shares in the last 4 days whilst local retail (-RM23m, Oct:-RM150m, Sep: +RM452m) and foreigners (-RM8m, Oct:-RM593m, Sep: -RM1.63bn) were the net sellers.

TECHNICAL OUTLOOK: KLCI

Following a commendable +87pts relief from a low of 1,373 to 1,460 yesterday, KLCI is set to challenge the long-term resistance level of 1,468. A successful breakout above the said hurdle will signal a trend reversal and potentially spur KLCI to revisit formidable barriers of 1,482-1,500-1,514 territory. On the flip side, failure to break above the resistance will signal a pullback to well-supported 1,400-1,424-1,436 levels.

MARKET OUTLOOK

With key events such as FOMC and BNM (3 Nov) meetings, GE15 nominations (5 Nov) and the polling date (19 Nov) around the corner, we expect KLCI to extend its range-bound consolidation as investors continue to be at risk-off mode. The recent relief rebound from 1,373 (2Y low) could also see upside caped near the 1,468 downtrend resistance level, with multiple stiff hurdles pegged at 1,480-1,500-1,518 levels thereafter (support: 1,400-1,424- 1,436). With capital preservation as the key amid lingering headwinds, we continue to advocate investors to seek refuge in banks, telcos, utilities, consumer, healthcare, and construction sectors, in anticipation that the new government post GE15 will continue to be highly supportive of domestic consumption.

VIRTUAL PORTFOLIO (FIG1)

We Took Profit on AIRPORT (5.8% Gain) After Hitting Our R1 Target Yesterday.

Source: Hong Leong Investment Bank Research - 1 Nov 2022