MARKET REVIEW

Asia/US. Ahead of the US midterms election outcome and Oct CPI data, Asian markets ended mixed after recent gains, weighed by worsening Covid resurgence in China stoked fears of potential new lockdowns and sluggish Oct PPI of -1.3% (contracted for the 1st time since Dec 20) due to weak domestic demand and disruptions to output on Covid curbs as well as falling commodity prices. After surging 1,159 pts in three consecutive days and ahead of the major Oct CPI data tonight, the Dow tumbled 646 pts at 32,514 amid indecisive US midterm election outcome (with Republicans heading for control of the House by smaller margins than forecast and the race for Senate still wide open) and weak results from Walt Disney. Sentiment was also dampened by deepening selloff in crypto currencies as Binance walked away from its planned takeover of FTX.com.

Malaysia. Bucking the mixed regional markets, KLCI inched up 4.8 pts to 1,446.2, boosted by strengthening RM (vs USD) to RM4.69 (off recent peak RM4.75), and buying interest on selected heavyweights i.e. MAYBANK, CIMB, PBBANK, PMETAL TENAGA, SIMEPLT and DIGI. Market breadth (G/L ratio) improved to 1.05 from 0.77 a day ago, backed by active trading volume of 3.07bn shares worth RM1.72bn in lower liners and ACE stocks. Foreign institutions were the major buyers for a 4th consecutive day (+RM77m, Nov:-RM45m) whilst local institution (-RM64m, Nov: +RM27m) and retailers (-RM13m, Nov: +RM18m) recorded net outflows for a 4th day.

TECHNICAL OUTLOOK: KLCI

In the short term, KLCI may continue to be trapped in a range bound consolidation, with major supports pegged at 1,400-1,408-1,428 while resistance fall at 1,457-1,468 levels. The bulls may regain control should there be a successful breakout above the said hurdles, thereby lifting KLCI toward 1,482, 1,500 and 1,510 barrier next.

MARKET OUTLOOK

After rallying 73 pts from 1,373 (13 Oct) to 1,446 yesterday, we envisage the local bourse to trade range bound in the near term as investors recalibrate the US mid-term election outcome and Oct CPI data, uncertainty over the future path of China’s zero-COVID policy amid rising Covid cases, GE15 fluidity and ongoing Nov results season. Short term supports are pegged at 1,400-1,418-1,425 whilst resistances are situated near 1,468- 1,482-1,500 zones.

Source: Hong Leong Investment Bank Research - 10 Nov 2022