KLCI Eyes 1,476-1,492 Range Pending a Successful Breakout Above 1,465 (triple Top)

KLCI:    1463.4    (-1.3)
DOW:    34152 (57)
FCPO (RM):    3720 (0)
BRENT (USD):    81.6 (-3.57)
USDMYR:    4.670 (0.033)
SGDMYR:    3.446 (0.0059)
EURMYR:    4.989 (0.006)
AUDMYR:    2.999 (-0.0222)
GBPMYR:    5.746 (-0.0104)
US: 10-yr yield (%)    4.57 (-0.08)
BNM:10-yr yield (%)    3.87 (-0.01)

Asia/US. Asian markets lost steam after recent rallies as investor enthusiasm about a peak in global interest rates faded, while awaiting Powell’s speeches (8 & 10 Nov) for clues on the central bank's next moves. Sentiment was also dampened by China’s weak trade data despite the IMF’s upgrade on China’s 2023 (+0.4% to +5.4%) and 2024 (+0.4% to +4.6%) GDP growth forecasts. Buoyed by the strength in mega tech stocks amid falling US10YT yield (-7 bps to 4.57%), the Dow booked its 7th straight gain (+56 pts to 34,152) despite hawkish remark by Michelle Bowman that the Fed will need to increase the federal funds rate further to bring inflation down to 2 % goal. Meanwhile, Brent oil slid 4.39% to USD81.44 as weak global economic data overshadowed concerns that the Israel-Hamas war could erupt into a broader regional conflict.

Malaysia. Following a 29.3-pt rally in the last three days, KLCI lost 1.3 pts at 1,463.4 on profit taking, in line with lower regional markets and a 0.7% pullback in RM (vs USD) to RM4.67. Market breadth turned negative at 0.74 vs 2.34 a day ago, accompanied by a 21% slide in trading value at RM2.17bn. After net selling RM2.19bn in Oct, foreigners emerged as major net buyers for a 4th consecutive session (+RM90m, Nov: +RM634m, YTD: -RM3.52bn) whilst local institutions (-RM72m, Nov: -RM395m, YTD: +RM4.5bn) and local retailers (-RM18m, Nov: -RM239m, YTD: -RM0.98bn) were the net sellers. 

Outlook. Expectations of peaking Fed rates, the RM reprieve vs USD (-2.6% from 25Y high at RM4.63) the return of foreign strong buying (Nov: +RM634m, Oct: -RM2.18bn) coupled with KLCI’s bullish indicators, the index could advance further this week. However, unfriendly macro backdrops i.e. the Middle East conflict, China’s uneven economic recovery, as well as lingering worries over Malaysia’s economic and corporate earnings outlook, the index could face formidable triple tops hurdle at 1,465 and 1,476 (100W MA) in the Nov results season. 

Source: Hong Leong Investment Bank Research - 8 Nov 2023