• After a period of cautious and volatile trading, the FBMKLCI concluded the week positively, closing at 1,668.82 pts, up 16.7 pts (+1.01%) from the previous week. This rise follows the recent interest rate cut by the U.S. Federal Reserve, which is anticipated to ease capital inflows into Malaysia, thereby strengthening the ringgit and supporting local equities.

• For the week ending September 20, foreign investors were net buyers of RM272mn, firming their position from the previous week’s net buying of RM218mn.

• This week sector rotation is anticipated to continue focusing on the Financials and Construction sectors, with subsequent shifts towards the Plantation, Tech, and Property sectors; based on analyses of relative strength and momentum.

• Given the overall positive trend, our year-end target for the FBMKLCI remains at 1,720 pts. However, we maintain a cautious stance, as rising global volatility may prompt more conservative trading as investors will be closely monitoring the upcoming Malaysia Budget 2025 announcement scheduled for October, as well as the outcome of the U.S. presidential election in November.

FBMKLCI inched +1.01% WoW

The FBMKLCI maintained its positive trajectory, closing at 1,668.82 pts, up 16.67 pts (+1.01%) WoW, mirroring the U.S. markets, driven by optimism that the U.S. Federal Reserve has successfully managed a soft landing for the economy, reducing recession concerns and enhancing investor confidence. However, throughout the week, market volatility remained a factor, driven by caution in anticipation of several key data releases, including the Fed's mid-week decision on rate cuts, alongside buying interest in key index stocks.

In light of the dovish shift in U.S. monetary policy on Wednesday, where the Fed reduced its benchmark interest rate by 50 bps to a range of 4.75%-5%, all sector indices on Bursa Malaysia recorded WoW positive performance, except for the Plantation Index, which was the worst-performing sector during Week 38 (refer to Table 5). This decline was driven by concerns over potential weakening demand, particularly from India, following the Indian government's decision to increase the basic customs duty on crude palm oil, soybean oil, and refined sunflower oil to 20% and 32.5%, respectively.We expect Bursa Malaysia to remain in consolidation mode this week with an upside bias, supported by ongoing investment from both local and foreign funds. However, we advise caution, as increasing global volatility may prompt more cautious trading as investors will be closely monitoring the upcoming Malaysia Budget 2025 announcement set for October, as well as the outcome of the U.S. presidential election in November.

Foreign and Local Investors Continue to Support Malaysian Market

We believe that the equity market will remain robust for the remainder of 2024 and into 2025, with ongoing market volatility continuing to support daily trading volume and value. For Week 38, the average daily traded volume and value rose to 3.30bn and RM3.78bn, respectively, up from 2.97bn and RM3.33bn in Week 37. This increase was driven by continued support from both local and foreign funds, mirroring the U.S. and global markets with buying support continued into key index stocks. Optimism surrounding the U.S. Federal Reserve's successful management of a soft landing for the economy has alleviated recession concerns and bolstered investor confidence, thereby strengthening the ringgit and supporting local equities as the week concluded.

All sector indices on Bursa Malaysia recorded WoW positive performance, except for the Plantation Index, which was the worst-performing sector during Week 38. This decline

Week 38 Marked the Sixth Consecutive Week of Foreign Net Buying

Foreign investors remained encouraging and continued to be net buyers during Week 38 (17 – 20 September), with a total amount of RM272mn. Note that, Week 38 marked the 6th consecutive week of foreign net buying since Week 33 (12-16 August). During this period, the sectors with the largest net buying by foreign investors were Financial Services (RM352.2mn), Healthcare (RM211.9mn), and Property (RM55.0mn). These gains were partially offset by net selling in the Utilities (-RM172.3mn), Technology (- RM85.3mn), and Consumer (-RM49.7mn) sectors. The top net buys by foreign investors were CIMB, Top Glove, and Public Bank, while the top net sells were YTL, MYEG, and Tenaga.

Our View

This week, we anticipate that Bursa Malaysia will continue in consolidation mode with an upside bias, backed by ongoing investments from both local and foreign funds. However, we advise caution, as rising global volatility could prompt more conservative trading as investors will be closely monitoring the upcoming Malaysia Budget 2025 announcement in October, as well as U.S. economic policies leading up to the presidential election in November. Additionally, concerns over ongoing economic challenges related to China’s slowdown and geopolitical tensions may weigh on market sentiment.

Sector rotation this week is expected to focus on the Financials and Construction sectors, with subsequent shifts towards the Plantation, Tech, and Property sectors; based on analyses of relative strength and momentum.

Source: BIMB Securities Research - 23 Sept 2024