BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
Key index stocks on Bursa Malaysia continues to ascend, breaking out of the 1,650 level with banking entities providing most of the lift that was earlier buoyed by Public Bank Bhd’s generous bonus issue.
Apart from banking stocks, however, conditions in the broader market were relatively mixed with losing stocks gaining the upper hand against winning stocks amid the bouts of profit taking and rotational plays.
At the same time, overall market interest also waned due to the already toppish market conditions.
We maintain our view that the key index is toppish following its near 13.0% gain over the past six weeks – a run-up that started on optimism over the COVID-19 vaccine development which we think is overplayed.
The bouts of early window dressing activities among the heavyweights have also helped to push the key index past the 1,650 level and leaving the overbought conditions.
While we note that there are still no signs of a meaningful consolidation as yet, the increasingly toppish environment suggest that one is already due.
As it is, yesterday’s gains were more modest and further gains could become more tepid with the upsides likely to be capped at 1,667 points, in our view.
In the interim, there is a resistance at the 1,656 level, while the supports are pegged at 1,650 and 1,631 points respectively.
Hong Leong Investment Bank Research
Despite a positive upgrade for developing Asia economies in 2021 amid China’s strong pace of recovery, Asian markets ended mixed on stalled US stimulus negotiations and a staggering surge in COVID-19 cases worldwide.
The Dow fell as much as 192 points to 29,876 before reducing the losses to 69 points at 29,999 as investors looked for signs of progress in fiscal stimulus talks to support the faltering US economy after a surge in weekly jobless claims data with most of the government financial aids for Americans and businesses has dried up.
Following a 202-point or 13.9% rally from 1,452 low to 1,654 yesterday (approaching our third major resistance targets of 1,618-1,638-1,668 range), the FBM KLCI is ripe for a mild profit taking consolidation.
This is on the back of a steeply overbought stochastic reading, concerns over the uneven global economic recovery amid spiking COVID-19 cases worldwide, the repercussions on our economy and corporate earnings after the CMCO 2.0 as COVID-19 infections stay elevated, and Fitch’s downgrade on Malaysia’s sovereign credit rating.
However, we opine that the traditional December window dressing (average +3.8% return from 1990-2019 with an 87% successful hit rate) and continued migration from pandemic-themed to economic recovery proxies could cushion near-term pullback near 1,600-1,618 levels. – Dec 11, 2020
