Buoyant risk appetite by foreigners to cushion potential consolidation during the peak of the 4Q23 results season week

KLCI: 1549.11 (3.6)

DOW: 39131.53 (62.4)

MSCI Asia: 173.01 (0.1)

FCPO (RM): 3853 (14)

BRENT (USD): 81.62 (-2.05)

USDMYR: 4.7773 (0.002)

SGDMYR: 3.5507 (-0.011)

EURMYR: 5.1678 (-0.015)

AUDMYR: 3.1308 (-0.013)

GBPMYR: 6.0463 (-0.007)

US: 10-yr yield (%) 4.248 (-0.073)

BNM:10-yr yield (%) 3.90 (0.04)

Asia/US. Mirroring the record-high closings on Dow and Nikkei 225, most Asian bourses ended higher, ignited by strong buying interests amid enthusiasm over AI-related stocks, strong Japan’s corporate profits, a robust outlook for exporters amid a weakening yen and the BOJ’s dovish policy. Meanwhile, as a series of market-supportive measures in China also boosted investor confidence. Dow gained 62pts at 39,131 (+503 pts WoW), as investors weighed a wave of AI-fuelled optimism following NVDA’s blockbuster earnings and positive guidance, as well as the mixed readings from Jan’s Leading Economic Index (LEI) along with Feb’s PMI which pointed that the overall US economy remains strong but is seeing signs of slowing. This week, investors will be watching Jan PCE inflation data along with updates on personal income, personal spending, the ISM manufacturing PMI, coupled with updates on the housing market, consumer confidence, and durable goods orders.

Malaysia. In line with Dow’s record-breaking session and sustained foreign net inflows, KLCI rebounded 3.6 pts to 1,549.1 (+16 pts WoW), despite tempered by persistent ringgit’s weakness and a healthy profit taking after rallying 91 pts YTD. On funds flow, foreign investors booked their net inflows for the 17th consecutive session (+RM172m, YTD: +RM2.3bn) while the local retailers (-RM87m, YTD: -RM1.03bn) and local institutions (-RM85m, YTD: -RM1.26bn) emerged as the major sellers.

Outlook Bursa Malaysia should witness potential profit-taking dip during this peak of the 4Q23 results season this week and caution from recent weakness in the local currency. However, persistent net inflows by foreign investors (4th consecutive month), supported by an uptick in foreign shareholding to 19.6% in Jan (vs all-time low of 19.5% in Dec 23) and YTD foreign net inflows amounted to RM2.31bn (a reversal from -RM2.6bn in 2023) may cushion downside risk (support: 1,522-1,533; resistance: 1,570-1,580-1,600).

Source: Hong Leong Investment Bank Research - 26 Feb 2024