BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Hong Leong Investment Bank (HLIB) Research Head of retail research Ng Jun Sheng
Following a 137-point or 9.4% rally from a low of 1,452 (on Nov 2) to 1,589 last Friday (Nov 13), the FBM KLCI’s technical has turned grossly overbought.
We believe a pullback is likely this week amid concerns about the uneven global economic outlook due to the surging global COVID-19 infection rate and new lockdowns coupled with uncertainty about the production and distribution of the COVID-19 vaccines.
Moreover, lingering worries about weaker 4Q CY2020 economy and corporate earnings in Malaysia due to the CMCO 2.0 since Oct 14, ongoing 3Q FY2020 results season, and the Budget 2021 approval (expected by end-November) will continue to affect sentiment.
Key supports are pegged at 1,555-1,536 levels while resistances are situated near 1,600-1,618 levels.
Inter Pacific Research
On all counts, the FBM KLCI remains overbought after its recent surge that leaves it at its two-month high.
Valuations have also perched into the expensive region as well, but with few signs of a pullback as yet as we see the key index largely on a holding pattern for the time being.
We think that there will still be bouts of support to keep the FBM KLCI elevated for now as the market awaits for more corporate results to be reported later in the month.
As it is, corporate results are set to improve quarter-on-quarter following the resumption of more economic activities and firmer export performances that may provide some support to share prices.
Still, we think any further near-term upsides will be modest due to the toppish conditions and this leaves the 1,600-1,611 levels as the major hurdles for the key index to clear. On the other hand, the supports are at 1,580 and 1,570 respectively. – Nov 16, 2020
