KLCI:    1443.8 (7.3)
DOW:    33631 (-174)
FCPO (RM):    3616 (-22)
BRENT (USD):    86.0 (0.18)
USDMYR:    4.712 (-0.0047)
SGDMYR:    3.458 (-0.0024)
EURMYR:    5.003 (0.0014)
AUDMYR:    3.021 (-0.0076)
GBPMYR:    5.795 (0.001)
US: 10-yr yield (%)    4.70 (0.14)
BNM:10-yr yield (%)    4.03 (0.00)

Asia/US*. Ahead of the release of US Sep CPI, a dovish shift in tone from Fed officials, along with falling US 10-year yields and news that China is considering increasing its budget deficit to stimulate a slowing economy, bolstered sentiment. Ahead of the major 3Q23 earnings parade from BlackRock, Citigroup, JPMorgan, UnitedHealth and WellsFargo tonight, the Dow halted its 4-day winning, tumbling 174 pts to 33,631 whilst US10Y yield surged 14 bps to 4.7%. Sentiment was spooked by higher-than-expected US Sep CPI (3.7%, forecast: 3.6%) as expectations of another rate hike later in Nov/Dec meetings increased in order to rein sticky inflation. 

Malaysia. Mirroring higher regional markets, KLCI jumped 7.3 pts to record its 5th straight gain, led by strong buying interests in banking and telco stocks. Market breadth was bullish at 1.72 vs 1.16 a day ago, with ADTV rose 8% to RM2.12bn. Foreign institutions turned net buyers (+RM118m, Oct: -RM1.13bn, YTD: -RM3.76bn) while the local retailers (-RM58m, Oct: -RM22m, YTD: -RM0.65bn) and local institutions (-RM60m, Oct: +RM1.16bn, YTD: +RM3.76bn) emerged as major net sellers. 

Outlook Prior to the widely-focused Budget 2024 speech today, KLCI’s outlook has strengthened following a bullish 200D MA breakout yesterday (supports: 1,390-1,410, resistances: 1,451-1,465), supported by a slew of less hawkish remarks by Fed officials and expectations of a massive China’s stimulus measures to kickstart its slowing economy. We reiterate our buy on dips stance to ride on a better 4Q23 (YE target: 1,530), underpinned by: (i) improved risk appetite post state polls and clearer political runway allowing the Unity Government to roll out its strategic plans and reforms; (ii) undemanding KLCI at 13.1x 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 - 13 Oct 2023