MARKET REVIEW

Asia/US. Tracking a rally on Wall St overnight, most Asian markets ended higher after Powell signalled a slower pace of future rate hikes and China’s slow but visible progress in relaxing harsh Covid restrictions. Ahead of the key Nov jobs data release tonight, the Dow tumbled as much as 461 pts before paring the losses to -194 pts at 34,395 after rallying 1,856 pts in Oct, as investors weighed on a slew of economic reports from a sluggish Nov PMI manufacturing, resilient consumer spending and slowing PCE inflation. Meanwhile, the US 10Y Treasury yield slipped further by 10bps to 3.5% amid rising recessionary fears in the US and Powell’s less-hawkish remark.

Malaysia. Tracking a rally on Wall St overnight and RM/USD (-0.89% to 4.40), KLCI rose as much as 8.4 pts before paring the gains to 2.7 pts at 1,491.5 amid a weakening Nov PMI print and ahead of the formation of a new cabinet line-up. Funds flow wise, foreigners (+RM77m) and local institutions (+RM51m) were the major net buyers whilst retailers net sold RM128m shares.

TECHNICAL OUTLOOK: KLCI

After rallying 58.4pts to a 3M high of 1,501.9 on 24 Nov, KLCI retreated to a low of 1,464 before staging a technical rebound at 1,491.5. The strong close above 10D/20D MAs and support trendline (from 2Y low of 1,373) could indicate more upside in the near term towards 1,505 (200D MA) before re-challenging 1,528 (17 Aug high) and 1,553 (200W MA) zones. Key supports remained situated at 1,454-1,468 levels.

MARKET OUTLOOK

Pending the new cabinet line-up announcement and Powell’s less hawkish remark coupled with a seasonally positive December outings (10Y/20Y: +2.6%/2.8%), KLCI may revisit the key 200D MA barrier or 1,505 next before marching higher towards 1,528-1,553 zones. On the flip side, a decisive breakdown below 1,454-1,468 support will drag KLCI lower to 1,420-1436 levels.

VIRTUAL PORTFOLIO (FIGURE 1)

Following recent strong market rally post GE15, we decided to take profit on TENAGA (+13.1% return), VS (+16.1% return) and SAMAIDEN (+9.6% return).

Source: Hong Leong Investment Bank Research - 2 Dec 2022