MARKET REVIEW

Asia/US. Tracking overnight gains on Wall St, most Asian markets ended marginally higher as investors welcomed a possible political gridlock in US government with Republicans are likely to control at least one chamber of Congress, throwing a wrench into the aggressive fiscal spending and tax hikes plans by the Democrats. Meanwhile, Shanghai markets continued to lag after the country reported surging Covid cases and government’s continued adherence to its Covid-Zero policy. Ahead of the midterm election outcome and Oct CPI report (10 Nov), the Dow rallied for a 3rd day (+334 pts to 33,160) as investors are projecting a divided government with Republicans taking control of the House and potentially limiting the Biden’s administration legislative plans.

Malaysia. KLCI eased 0.7-pt in a choppy trade after hovering within 1433-1448 levels pending clearer domestic leads with investor focus on local political campaign and ongoing Nov results season. Market breadth (G/L ratio) slipped to 0.77 from 1.01 a day ago. Foreign institutions were the major buyers for a 3rd straight session (+RM55m, Nov:-RM122m) whilst local institution (-RM37m, Nov: +RM91m) and retailers (-RM18m, Nov: +RM31m) recorded net outflows for a 3rd day.

TECHNICAL OUTLOOK: KLCI

In the short term, KLCI may continue to be trapped in a range bound consolidation, with major supports pegged at 1,400-1,408-1,425 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 1,455, thereby lifting KLCI toward 1,482, 1,500 and 1,510 hurdles next.

MARKET OUTLOOK

After rallying 68 pts from 1,373 (13 Oct) to 1,441 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- 1,418-1,425 whilst resistances are situated near 1,455-1,468-1,482 zones. Technically, after hitting 8Y low at RM1.46 (20 Sep), HARTA’s share price is forming a rounding bottom pattern to reach a high of RM2.20 (2 Nov) before ending at RM2.07. A successful breakout above RM2.20 may lift the stock to revisit RM2.35-2.50 zones. Conversely, a decisive breakdown below RM1.95 (20D MA) may witness further weakness to RM1.76-1.85 zones.

Source: Hong Leong Investment Bank Research - 9 Nov 2022