Uptrend May Continue Towards 1,502-1,512-1,528 Levels Before Profit Taking Emerges 

KLCI: 1495.7 (8.1)
DOW: 37683.01 (216.9)
MSCI Asia: 165.97 (0.2)
FCPO (RM): 3649 (-44)
BRENT (USD): 76.35 (-2.41)
USDMYR: 4.6515 (-0.004)
SGDMYR: 3.4964 (0)
EURMYR: 5.0887 (0.008)
AUDMYR: 3.1161 (0.005)
GBPMYR: 5.9064 (0.013)
US: 10-yr yield (%) 4.0305 (-0.015)
BNM:10-yr yield (%) 3.84 (-0.04)

Asia/US. Asian markets ended mostly lower as investors brace for the key US inflation data and the start of the 4Q23 results season. Lingering geopolitical tensions were also on the radar amid attacks in the Red Sea, prolonged Israel-Hamas war, coupled with the impending Taiwan Presidential election outcome this weekend followed by China’s reaction. Despite a 8% slide on Boeing following the latest issue with its 737 MAX 9 Jets, the Dow rallied 217 pts at 37,683, lifted by a rally in mega tech shares as US10Y bond yield eased 2 bps to 4.03%. This week, the main focus will be on the start of the 4Q23 results season and the Dec inflation rate (11 Jan), followed by the PPI prices (12 Jan) and Fed officials’ speeches to assess the future path of US monetary policy. 

Malaysia. In wake of the persistent foreign net inflows, KLCI jumped 8.1 pts to 1,495.7, boosted by the imminent signing of a MOU for the Johor-Singapore SEZ (11 Jan) and expectations of more news flow on the HSR, coupled with the coronation of the 17th Agong (31 Jan). Market breadth was positive for a 5th straight day, albeit lower 1.34 vs 2.13 a day ago while trading volume and value rose 13% and 22% to 6.9bn shares valued at RM4.2bn, respectively. Local retailers were the net sellers for the 4th straight day (-RM79m, Jan24: -RM462m, Dec:-RM92m) whilst foreign investors (+RM30m, Jan: +RM554m, Dec: +RM257m) and local institutions (+RM49m, Jan: -RM92m, Dec: -RM165m) were major net buyers. 

Outlook. The ongoing strong buying momentum could sustain in the early part of this week as investors take cues from the resilient Wall St and favourable domestic leads, the return of foreign investors, and supported by rising risk appetite for the laggard Bursa Malaysia amid Fed’s pivot and undemanding KLCI’s CY 2024 P/E at 13.4x (vs 10Y mean 16.6x). However, profit taking may emerge near 1,512-1,528 zones as we brace for the US inflation data and 4Q23 results season coupled with the outcome of Taiwan’s election this weekend.  

Source: Hong Leong Investment Bank Research - 9 Jan 2024