MARKET REVIEW

Asia/US. Asian markets ended cautiously higher as investors continued to weigh on unverified news of an end to China’s zero-Covid policy, as well as awaiting more guidance from Powell’s post meet speech on the US economic and rate outlook. Overnight, Dow surged as much as 418 pts after the Fed delivered its 4th 75 bps hike to 3.75%-4% (6th

consecutive rate hike YTD) and hinted that the central bank may be slowing the magnitude of future rate hikes. Nevertheless, the index nose-dived (-505 pts to 32,147) after Powell’s speech that the talk of a pause in rate hikes is "premature" and the terminal interest rate will most likely be higher than previously forecasted to squash stubborn inflation.

Malaysia. In sync with higher regional markets, KLCI gained 5.7 pts to 1,451.6 after moving between 1,442.9 and 1,451.9, led by selected energy and healthcare stocks. Market breadth (G/L ratio) improved to 1.43 from 0.80 a day ago. Local institution returned as net sellers (-RM12m, Oct: +RM785m, Sep: +RM1.17bn) whilst local retail (+RM11m, Oct:-RM124m, Sep: +RM452m) and foreigners (+RM1m, Oct:-RM661m, Sep: -RM1.63bn) were the major buyers.

TECHNICAL OUTLOOK: KLCI

We reiterate that only a successful breakout above the immediate key downtrend resistance near 1,468 will only signal a trend reversal and potentially spur KLCI to revisit formidable barriers of 1,482-1,500-1,513 territory. Conversely, failure to break above the resistance will witness further consolidation towards 1,400-1,420-1,436 support levels.

MARKET OUTLOOK

The local bourse may witness further range bound consolidation in the short term, taking cues from Powell’s hawkish stance and the upcoming key events from BNM OPR decision (3 Nov), GE15 nominations (5 Nov) and polling date (19 Nov), as investors continue to be at risk-off mode. We reiterate that the recent relief rally from 1,373 (2Y low) would face stiff hurdles near 1,468-1,480-1,500 zones whilst supports are pegged at 1,400-1,420-1,436 levels. Technically, after rebounding from 8Y low of RM0.92 (16 Aug) to RM1.21 yesterday KOSSAN (HLIB Research-HOLD-RM1.12) is poised for a short term consolidation with stiff hurdles at RM1.28-1.31-1.37 while supports are pegged at RM1.05-1.10-1.15 zones.

VIRTUAL PORTFOLIO (FIG1)

In the wake of prevailing volatility, we decided to take profit on SWIFT (8.4% return) yesterday

Source: Hong Leong Investment Bank Research - 3 Nov 2022