BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
Stocks on Bursa Malaysia continues to head south amid the flare-up of global COVID-19 cases that is dampening sentiments once again and prompting further profit taking on stocks that have rallied strongly over a six-week period from November.
The pullback is also due in part to fewer compelling buys amid the still toppish valuations that have largely reflected the potentially stronger earnings recovery in 2021.
Again, the selling was widespread with losing stocks easily thumping gainers, while traded volumes remain moderate.
As we have noted, we think the indifferent trend could continue due to the lack of fresh buying impetuses with fewer near-term catalysts to spur fresh buying.
The positivity over the soon-to-be available COVID-19 vaccines have been largely reflected, in our view, as we believe it has been priced-into the current share prices following the past few weeks’ run-up.
Therefore, we think the downside bias remains for now, leaving the consolidation trend intact as we think the ongoing year-end holiday season is also likely to see reduced market following.
With the 1,650-level breached, the supports are now at 1,640 and 1,631 points respectively. Meanwhile, the 1,650 level is now the immediate hurdle, followed by the 1,660 level.
Malacca Securities Research
As the market was spooked by the new COVID-19 virus strain that caused another lockdown in the UK, the negative sentiment may spill over to stocks on the local front.
However, we opine that the downside risk might be limited given the vaccine roll-out is on the way. Investors could remain focus on the potential emergence of the Kuala Lumpur-Singapore High Speed Rail (HSR) news flow, coupled with the Large Scale Solar 4 (LSS4) project that is expected by year-end.
Meanwhile, focus could turn to the vaccine distribution candidates this week.
The FBM KLCI pulled back for the third session straight as market players were reducing exposure after a decent run-up since November.
We believe the FBM KLCI could be due for a technical rebound nearer to the support of 1,640 (followed by 1,620). Meanwhile, resistance is envisaged around 1,680-1,700. – Dec 22, 2020
