MARKET REVIEW

Asia/US. Most Asian markets ended mixed from early losses as investors awaited the Nov FOMC meeting minutes tonight that could offer clues on the trajectory of future US rate hikes. Sentiment was also affected by surging Covid infections near record high in certain manufacturing hubs in China, reignited fears of global supply chain disruptions amid stricter lockdowns. Despite a resurgent Covid cases in China and Thanksgiving holiday-shortened week, the Dow surged 398 pts at 34,096, driven by a host of strong retail earnings and the potential for smaller Dec rate hikes. San Francisco and Cleveland Presidents echoed for a moderating rate hikes tempo in Dec but reaffirmed the need for further hikes to curb inflation.

Malaysia. KLCI extended 5th decline out of six as sentiment continued to be weighed by the unprecedented hung parliament election outcome and further delay in naming a new government. Market breadth (G/L ratio) remained below 1 for the 4th straight session although improving to 0.85 from 0.74 a day ago. On funds flow, foreign investors were the major sellers (-RM156m, Nov: -RM438m) for a 5th consecutive day whilst local institutions (+RM65m, Nov: +RM154m) and retailers (+RM91m, Nov: +RM285m) were the major net buyers.

TECHNICAL OUTLOOK: KLCI

Pending the formation of a new government in the near term, KLCI is likely to experience further consolidation ahead, with major supports pegged at 1,373-1,400-1,420 levels. The extension may drag on until we witness a strong breakout above downtrend line (DTL) near 1,450 could spur further advance towards 1,468-1,482 zones.

MARKET OUTLOOK

In the wake of a political impasse to form the next government as BN is seeking for its audience with the Agong (10.30am today) to be postponed, KLCI may witness further wild swings ahead (compounded by ongoing results season). Immediate supports are situated at 1,400-1,420 whilst a more solid supports are 1,362-1,373 zones (resistance: 1,454- 1,469-1,482). We like FOCUSP (HLIB-BUY-RM1.51 TP) for its scalable business model as we reckon that both optical and F&B segments are poised to ramp up fully with resumption of economic activities. Technically, the stock should attract buyers on weakness, with a decisive breakout above the RM0.76 (downtrend line from RM0.83) to aim for higher upside towards RM0.80-0.85 zones, while downside is cushioned by supports near RM0.68-0.70.

Source: Hong Leong Investment Bank Research - 23 Nov 2022