MARKET REVIEW

Asia/US. Asian markets ended broadly higher amid euphoria over softening US Oct CPI, improving the prospects of a dovish tilt by the Fed after a stretch of four 0.75% jumbo -sized hikes. Sentiment was also helped by China’s relaxation of the quarantine period for travellers and close contacts of infected people. Following a 1,201-pt rally on Thursday, the Dow fell as much as 321 pts on profit taking before ending +33 pts at 33,748 (+1,345 pts WoW) last Friday as investors recalibrated the prospects of the Fed to turn more moderate in its hawkish policy and the fresh turmoil in the crypto space coupled with easing Covid measures for travelling in China. On the data front, despite a welcoming slower growth in Oct CPI, shadows still remained as short-term inflation expectations climbed to 5.1% in Nov (Oct: 5%) while long-term expectations rose to 3% (Oct: 2.9%).

Malaysia. In line with bullish regional markets, KLCI surged 18.5 pts to 1,468.2 (+29.9pts WoW). Sentiment was also cheered a stronger-than-expected 3Q GDP, ringgit strength vs USD (-1.59% to RM4.623) and a resumption of foreign net inflow for a 6th consecutive session. WoW, the number of gainers beat falling counters in three of the five days and average daily trading volume jumped 18% to RM3.16bn worth RM1.77bn. The change of fortunes also saw foreign investors turning net buyers RM424m (vs -RM276m the previous week) while both the domestic institutions and local retailers registered net outflows of RM253m (vs +RM225m) and RM171m (vs +RM51m), respectively.

TECHNICAL OUTLOOK: KLCI

Taking cue from an overnight 3.5% relief rally from Dow overnight, KLCI finally staged a long-awaited downtrend line breakout last Friday to end at our envisaged 1,468 (50% FR) resistance. Ahead of the crucial GE15 on 19 Nov, KLCI is likely to consolidate its recent gains after rallying 95 pts from 1,373. Stiff hurdles are situated at 1,482-1,500-1,508 whilst supports are pegged at 1,424-1,436-1,454 zones.

MARKET OUTLOOK

After surging 95 pts from 1,373 (2Y low) and 30pts WoW, KLCI could encounter stiff resistances near 1,480-1,500-1,508 zones (key supports: 1,424-1,436-1,454), as investors assess the US midterms election outcome, uncertainty over the future path of China’s zero Covid policy, President Biden and President Xi meeting in G20 Summit today, GE15 fluidity and ongoing Nov results season.

Source: Hong Leong Investment Bank Research - 14 Nov 2022