Strong inflows from foreigners to support upward momentum to retest 1,572 next 

KLCI: 1558.8 (11.2)

DOW: 38972.41 (-96.8)

MSCI Asia: 173.26 (0.5)

FCPO (RM): 3925 (3)

BRENT (USD): 83.65 (1.12)

USDMYR: 4.761 (-0.016)

SGDMYR: 3.5441 (-0.01)

EURMYR: 5.1671 (-0.012)

AUDMYR: 3.1201 (-0.007)

GBPMYR: 6.0415 (-0.016)

US: 10-yr yield (%) 4.3032 (0.024)

BNM:10-yr yield (%) 3.866 (0.017)

Asia/US. In anticipation of the key US durable goods orders (27 Feb) and PCE (29 Feb) reports, most Asian stocks rebounded as easing inflationary pressures in Japan bolstered bets that the BOJ would keep ultra-loose monetary settings for an extended period. Sentiment was also lifted by the upcoming NPC’s Congress (scheduled on 5 Mar) for signs of further policy support from Beijing. Ahead of the widely-watched PCE data, the Dow fell as much as 187 pts before paring its losses to 97 pts at 38,972, as investors scrutinised a set of poor US durable goods orders (fell at the sharpest pace since Apr 2020) and new home sales (rose less than expected) for insights into future interest rate trends.

Malaysia. Aligned with the rebound in China markets and persistent foreign net inflows, driven by weak Ringgit, undemanding valuation of Bursa Malaysia, steady economic growth and improving domestic politics, KLCI soared 11.2 pts to 1,558.8 on strong buying interests in utilities, gaming and telco heavyweights. Market breadth was negative for a 3rd session at 0.96 but improved from 0.70 previously. On fund flows, foreign investors resumed their net buying trends (+RM190m, Feb: +RM1.75bn, YTD: +RM2.43bn) whilst local retailers (-RM52m, Feb: -RM430m, YTD: -RM1.1bn) and local institutions (-RM138m, Feb: -RM1.32bn, YTD: -RM1.33bn) continued their net outflows.

Outlook Bursa Malaysia may experience volatility (key support: 1,522-1,533) during the peak of the 4Q23 results season this week, alongside with the upcoming key economic data from the US and China, coupled with the Fed officials’ speeches for further insights of global interest rates trends. However, continued net inflows by foreign investors for the 4th consecutive month (YTD: +RM2.43bn vs -RM2.6bn in 2023) and an uptick in foreign shareholding to 19.6% in Jan (vs all-time low of 19.5% in Dec 23), could provide near term momentum for KLCI to re-challenge 1,572-1,585-1,600 hurdles.

Source: Hong Leong Investment Bank Research - 28 Feb 2024