MARKET REVIEW

Asia/US. Most Asian markets ended mixed as investors assessed the strong Nov payrolls data on future Fed’s policy and China’s gradual zero-COVID relaxation in more cities due to rapid economic slowdown (Nov composite PMI slumped to 6mth low) and rising public outcry. The Dow slid 482 pts to 33,947 as stronger-than-expected Nov ISM services and Oct factory orders reports coupled with last week’s Nov jobs data signalled resiliency in the US economy, stoking concerns about higher for longer interest rates ahead of the 13-14 Dec FOMC meeting.

Malaysia. Tracking lower Asian markets, KLCI fell for a 2nd day (-10.2 pts to 1,471.6) following the announcement of unity government cabinet last Friday as investors may need more time to assess the new cabinet line-up is cohesive and effective to work as a team in tackling various socio-economic and political issues that are affecting the nation. Foreigners continued its net selling for the 11th sessions out of 13 (-RM197m; Dec: -RM413m) whilst local institutions (+RM171m; Dec: +RM524m) and retailers (+RM28m; Dec: -RM111m) were the major net buyers.

TECHNICAL OUTLOOK: KLCI

Following the cabinet announcement last Friday, KLCI continued its consolidation mode as the index failed to surpass the critical 200D MA near 1,504 levels. As long as the index is able to close above the key support trend line (from 2Y low of 1,373) near 1,454, we are optimistic that KLCI could resume its upward momentum after a brief consolidation. Key supports are pegged at 1,436-1,454 whilst resistances are situated at 1,504-1,528-1,555 zones.

MARKET OUTLOOK

Trading conditions may remain choppy in the near-term, as investors assess the unity government cabinet and renewed Fed-jitters following recent batch of stronger-than expected US economic data coupled with the upcoming vote of confidence on PM (when Parliament convenes on 19 Dec) and the UMNO General Assembly from 21-24 Dec. However, downside risk is limited (support: 1,436-1,454; resistance: 1,504-1,528) in anticipation of further economic reopening in China and Bursa’s depressed valuation (CY23 P/E 13x vs 10Y mean 16x).

Source: Hong Leong Investment Bank Research - 6 Dec 2022