MARKET REVIEW  

Asia/US. Last Friday, most Asian markets ended lower as hawkish signals from the Fed to tighten policy further to stamp out inflation, and mounting worries over resurgent Covid outbreaks in China that dashed reopening hopes and dimmed the economic outlook further. The Dow jumped as much as 282 pts amid better-than-expected retail earnings but the gains were pared down to 199 pts at 33,745 (-3 pts WoW) following hawkish remarks by Fed’s Presidents of Boston and St. Louis dashed hopes of a pause in the central bank's tightening cycle. Ahead of the holiday-shortened week (will be closed Thursday and early Friday due to the Thanksgiving), all eyes are on the Nov US manufacturing & services reports coupled with the Nov FOMC minutes on Wednesday.

Malaysia. After falling 19.8 pts in three days, KLCI ended +0.9-pt at 1,449.3 last Thursday ahead of the special holiday on 18 Nov and GE15 polling (19 Nov). WoW, KLCI slid 18.9 pts, underpinned by a negative market breadth in three of the four trading days whilst average daily trading volume tumbled 17% to RM2.63bn worth RM1.7bn. During the week, foreign investors net sold RM272m shares vs a net inflow of RM424m a week ago while local institutions and retailers registered net buying of RM152m (-RM253m WoW) and RM120m (-RM171m WoW), respectively.

TECHNICAL OUTLOOK: KLCI

Given the hung parliament situation and political risk premium, KLCI is likely to experience a knee-jerk selloff this week to retest key supports at 1,350-1,373-1,400 levels. Conversely, key resistances are pegged at 1,454-1,469-1,482 zones.

MARKET OUTLOOK

As a hung parliament election outcome is unprecedented for Malaysia and accompanied by political risk premium, KLCI is likely to see a knee jerk selloff today but the impact could be cushioned by a 10.5% slide from YTD high of 1,620. Immediate support is pegged at 1,400 levels, whilst a more solid supports are situated at 1,350-1,373 zones (resistance: 1,454- 1,469-1,482). In the wake of contract wrangle with CGP coupled with fear of losing its operating license, DNEX’s (HLIB-BUY-RM1.32) price slumped 33% to end at RM0.505 last Thursday. Technically, the slide has pretty-much priced in the “worst-case scenario” and further downside is likely to be well-cushioned at RM0.455, which is attractive to bargain for rebound upside to the RM0.54-0.58 levels. A convincing breakout above RM0.58 should lift prices higher to RM0.65-0.70 going forward. Stronger retracement supports are pegged at RM0.365-0.40 territory.

Source: Hong Leong Investment Bank Research - 21 Nov 2022