Must Break Above 1,465 Stiff Hurdles Before Trending Higher Towards 1,476-1,492 Zones

KLCI:    1457.6 (-5.8)
DOW:    34112 (    -40)
FCPO (RM):    3761 (-7)
BRENT (USD):    79.5 (-2.07)
USDMYR:    4.683 (0.013)
SGDMYR:    3.451 (0.0043)
EURMYR:    4.995 (0.0053)
AUDMYR:    3.008 (0.0087)
GBPMYR:    5.735 (-0.0114)
US: 10-yr yield (%)    4.49 (-0.07)
BNM:10-yr yield (%)    3.87 (0.00)

Asia/US*. Asian markets struggled for direction after recent rallies as investors awaiting Powell’s speeches (8 & 10 Nov) for clues on the Fed's next moves, overshadowing China’s central bank governor commented that the nation is expected to achieve its 2023 annual growth target of 5% smoothly. After a massive 1,735 pts rally in seven straight sessions, the Dow fell as much as 156 pts before paring the losses to 40 pts at 34,112 as investors weighed recent batch of underwhelming corporate earnings outlook and digested remarks from Fed officials as well as sliding UST10Y yield (-7 bps to 4.49%, -53 bps from 25Y high of 5.2%). On the policy front, Fed Governor Michelle Bowman flagged the possibility of further rate hikes due to the strength of the economy, while Powell did not comment on monetary policy in his opening remarks at the Fed's conference. 

Malaysia. Following a 29.3-pt rally from 2-6 Nov, KLCI retreated for a 2nd session, ending -5.8 pts at 1,457.6 (daily trading value: -9% to RM1.98bn), in line with lower regional markets and a 0.28% pullback in RM (vs USD) to RM4.683. Despite the headline loss, market breadth was positive at 1.19 vs 0.74 a day ago. After net selling RM2.19bn in Oct, foreigners emerged as major net buyers for a 5th consecutive session (+RM100m, Nov: +RM734m, YTD: -RM3.42bn) whilst local institutions (-RM82m, Nov: -RM457m, YTD: +RM4.42bn) and local retailers (-RM18m, Nov: -RM257m, YTD: -RM1bn) were the net sellers. 

Outlook. Expectations of peaking Fed rates, a mild RM recovery vs USD (-2.2% to 4.683 from 25Y high of RM4.79) and the return of foreign strong buying (Nov: +RM734m, Oct: -RM2.18bn), the index may record another back-to-back winning streak this week. However, unfriendly macro backdrops i.e. the Middle East conflict, China’s patchy 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 - 9 Nov 2023