KLCI:    1415.8 (-4.2)
DOW:    33129 (127)
FCPO (RM):    3701 (-14)
BRENT (USD):    85.8 (-5.11)
USDMYR:    4.730 (0.0067)
SGDMYR:    3.448 (0.0093)
EURMYR:    4.966 (0.0142)
AUDMYR:    2.992 (0.0099)
GBPMYR:    5.737 (0.03)
US: 10-yr yield (%)    4.73 (-0.06)
BNM:10-yr yield (%)    4.07 (0.04)

Asia/US. Ahead of the key US jobs data this Friday, Asian markets ended broadly lower, dented by surging bond yields amid hawkish comments from Fed officials and a hotter-than-expected JOLTS report, overtaking positive development from the temporary US shutdown deal over the weekend. The Dow rebounded 127 pts to 33,129 while the US10Y bond yield eased 7 bps from 16Y high at 4.73%, following the release of much weaker-than-expected private jobs data (89k, forecast: 160k). Overall, investors remained on edge and are looking toward Friday’s release of Sep’s nonfarm payrolls data for more clarity on the strength of the labour market, as well as charting Fed’s policy path ahead. 

Malaysia. In line with Wall St slide and weaker regional markets, KLCI lost 4.2 pts to 1,415.8, led by selling pressures on PMETAL, MAYBANK, CDB, HLFG, MAXIS and SIMEPLT. Market breadth plunged to 0.35 (remained negative for the 7th consecutive session) vs 0.74 previously. Foreign institutions logged the single day largest net selling trades YTD (-RM398m, Oct: -RM417m, YTD: -RM2.39bn) whilst local institutions (+RM331m, Oct: +RM313m, YTD: +RM2.9bn) and local retailers (+RM67m, Oct: +RM104m, YTD: -RM0.5bn) emerged as the major net buyers. 

Outlook Following a decisive breakdown below 200D MA (near 1,438), we expect KLCI to extend its rangebound consolidation (resistance: 1,438-1,448-1,465; support: 1,400-1,411) as investors weigh the direction of Fed policy, China’s recovery pace, depreciating RM (vs USD) and fears of potential new taxes in Budget 2024. We reiterate buy on dips to ride on a better 4Q23 (YE target: 1,530), underpinned by: (i) improved risk appetite post-election and clearer political runway allowing the Unity Government to roll out its strategic plans and reforms; (ii) undemanding KLCI at 12.8x CY2024 P/E (vs 10Y average 16.6x), (iii) the traditional year-end window dressing effect (92% positive hit rate in Dec since the GFC).

Source: Hong Leong Investment Bank Research - 5 Oct 2023