KLCI wavers as the 4Q23 reporting season enters its final leg 

KLCI: 1547.6 (-1.5)

DOW: 39069.23 (-62.3)

MSCI Asia: 172.78 (-0.2)

FCPO (RM): 3874 (11)

BRENT (USD): 82.53 (0.91)

USDMYR: 4.7773 (0)

SGDMYR: 3.5541 (0.003)

EURMYR: 5.1786 (0.011)

AUDMYR: 3.1274 (-0.003)

GBPMYR: 6.0573 (0.011)

US: 10-yr yield (%) 4.2795 (0.031)

BNM:10-yr yield (%) 3.87 (-0.03)

Asia/US. In anticipation of a string of key economic readings from Japan (inflation: 27 Feb), US (PCE: 29 Feb) and China (PMI: 1 Mar), most Asian stocks retreated as enthusiasm over AI-related stocks waned. After soaring 503 pts WoW, the Dow lost 62 pts on profit taking at 39,069 as the fervour on AI-fuelled optimism paused. Moreover, investors are awaited a slew of economic data (eg Jan PCE inflation data, personal income, personal spending, ISM manufacturing PMI, durable goods orders etc) and Fed officials’ speeches that will help to gauge the interest rate trends.

Malaysia. Tracking the tepid regional markets, KLCI eased 1.5 pts to 1,547.6 after rallying 15.6 pts WoW. Market breadth was negative for a 2nd session at 0.70 vs 0.73 last Friday, with daily traded value shrank 2.8% to RM3.12bn as most investors remained cautious as the 4Q23 reporting season enters its final leg this week. After recording net inflows of RM1.79bn for the 16th straight session, foreign investors turned net sellers (-RM65m, Feb: RM1.56bn, YTD: +RM2.24bn) followed by the local retailers (-RM18m, Feb: -RM378m, YTD: -RM1.04bn). Conversely, after 13 consecutive sessions of net selling amounting RM1.21bn, local institutions emerged as the sole buyers (+RM83m, Fed: -RM1.19bn, YTD: -RM1.2bn).

Outlook Bursa Malaysia may continue to waver during the peak of the 4Q23 results season this week, as well as bracing for the major economic data from the US, China and Japan. However, persistent net inflows by foreign investors for the 4th consecutive month (YTD: +RM2.2bn vs -RM2.6bn in 2023) coupled with an uptick in foreign shareholding to 19.6% in Jan (vs all-time low of 19.5% in Dec 23) amid the weak Ringgit, undemanding valuation, steady economic growth and improving domestic politics, may cushion further downside risk for KLCI (support: 1,522-1,533; resistance: 1,570-1,580-1,600).

Source: Hong Leong Investment Bank Research - 27 Feb 2024