MARKET REVIEW

Asia/US. Ahead of the US midterm elections tonight and inflation report (10 Nov), most Asian markets ended higher amid growing expectations that the Fed will slow its pace of interest rate hikes in coming months despite higher terminal interest rate than previously forecasted. Meanwhile, Shanghai markets lagged after the country reported slowing Oct trade data and growing Covid cases coupled with its commitment in maintaining strict zero Covid approach. The Dow rallied for a 2nd day (+424 pts to 32,827) as investors brace for the US midterm elections and inflation report. According to the consensus, the Republicans are likely to win at least one chamber of Congress, throwing a wrench into the aggressive fiscal spending and tax hikes plans by the Democrats, raising odds for higher equity and bond prices.

Malaysia. KLCI rose 3.8 pts to 1,442.1 in cautious trade ahead of the GE15 on 19 Nov and ongoing Nov results season. Market breadth (G/L ratio) narrowed to 1.01 from 2.39 last Friday. Foreign institutions were major buyers (+RM90m, Nov:-RM177m) whilst local institution (-RM83m, Nov: +RM128m) and retailers (-RM7m, Nov: +RM49m) recorded net outflows for a 2nd day.

TECHNICAL OUTLOOK: KLCI

In the short term, KLCI may continue to be trapped in a range bound consolidation, with major supports pegged at 1,400-1,420 while resistance fall at 1,450-1,460 levels. The bulls may regain 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 rallying 69 pts from 1,373 (13 Oct) to 1,442 yesterday, we envisage the local bourse to trade range bound in the near term as investors weigh on the US mid-term election outcome and Oct CPI data, uncertainty over the future path of China’s zero-COVID policy, GE15 fluidity 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.

Source: Hong Leong Investment Bank Research - 8 Nov 2022