MARKET REVIEW

Asia/US. Asian markets ended mostly higher, led by rallies in HSI (+5.3%) and SHCOMP (+2.4%) on renewed speculation over the potential lifting of COVID restrictions (despite denial by Chinese authorities), outweighed Powell’s hawkish speech that the terminal interest rate will most likely be higher than previously forecasted to squash stubborn inflation. After plunging 860 pts four days in a row, the Dow staged a 402 -pt technical rebound in a volatile session to end +402 pts at 32,403 last Friday, narrowing the weekly loss to 458 pts. Awaiting the US midterm election (8 Nov) and Oct CPI (10 Nov) report, investors mulled on the Fed’s Collins and Barkin hawkish remarks that the US central bank might need to raise rates near 5%, a mixed Oct jobs report and speculation about China easing Covid-19 lockdown measures.

Malaysia. Tracking higher regional markets, KLCI surged 18 pts last Friday, reducing the weekly losses to 9 pts at 1,438. 3, led by bargain hunting activities selected heavyweights (eg TENAGA, IHH, DIGI, PETDAG, SIMEPLT, AXIATA, MAXIS). Market breadth (G/L ratio) surged to 2.39 from 0.36 a day ago. Foreign institutions were major buyers (+RM64m, WoW: -RM277m, Nov:-RM212m) whilst local institution (-RM39m, WoW: +RM226m. Nov: +RM212m) and retailers (-RM25m, WoW: +RM51m, Nov: +RM56m) turned net sellers.

TECHNICAL OUTLOOK: KLCI

Despite the 17.9-pt technical rebound and a bullish Harami pattern last Friday, KLCI may continue to be trap in a range bound consolidation, with major supports pegged at 1,400- 1,418 levels. On the contrary, the bulls may be in control should there be a successful breakout above the downtrend resistance near 1,460, thereby lifting KLCI toward 1,482, 1,500 and 1,511 levels next.

MARKET OUTLOOK

After staging a 65-pt rebound from 1,373 (13 Oct) to 1,438 last Friday, we envisage the local bourse to trend range bound in the near term as investors weigh on the US mid-term election, US Oct CPI, no relaxation in China zero Covid policy, GE15 (polling: 19 Nov) and ongoing Nov results season. Short term supports are pegged at 1,400-1,418 whilst resistances are situated near 1,454-1,460-1,482 zones. Technically, SLP’s could witness some profit taking after rallying 24% to RM1.06 last Friday from RM0.855 (12 Oct), reflected by grossly overbought indicators. Major hurdles near RM1.13-1.20 will cap upside potential whilst chart supports from RM0.92-0.96-1.00 zones to cushion downside risk.

Source: Hong Leong Investment Bank Research - 7 Nov 2022