Uptrend still intact barring any breakdown below 1,520-1,533 support levels as market awaits fresh domestic leads

KLCI: 1545.59 (-13.2)

DOW: 38949.02 (-23.4)

MSCI Asia: 172.07 (-1.2)

FCPO (RM): 3925 (18)

BRENT (USD): 83.68 (0.03)

USDMYR: 4.771 (0.01)

SGDMYR: 3.5416 (-0.002)

EURMYR: 5.1527 (-0.014)

AUDMYR: 3.0967 (-0.023)

GBPMYR: 6.0237 (-0.018)

US: 10-yr yield (%) 4.2639 (-0.039)

BNM:10-yr yield (%) 3.892 (0.026)

Asia/US. Most Asian markets ended lower amid rate anxiety in anticipation of the key US PCE (29 Feb) data and the Fed officials’ speeches that will determine the path of monetary policy. Sentiment was also dampened by a 1.9% slide on SHCOMP amid increased anxiety over the country’s beleaguered property market after a liquidation petition was filed against giant developer Country Garden. The Dow declined for a 3rd consecutive session, tumbling as much as 231 pts before paring its losses to 23 pts at 38,949, as investors awaited the widely-watched PCE data tonight and digested the latest Fed officials’ comments that still favoured a patient and restrictive approach to monetary policy.

Malaysia. Aligned with the downbeat regional markets, KLCI slid 13.2 pts on profit taking pullback at 1,545.6 as investors weighed the expanded service tax scope at higher rate of 8% coupled with the peak of the 4Q23 reporting season. Market breadth was negative for a 4th straight session at 0.40 vs 0.96 previously. On fund flows, foreign investors resumed their net selling after net buying RM1.75bn in Feb (-RM269m, YTD: +RM2.16bn) whilst local institutions (+RM194m, Feb: -RM1.13bn, YTD: -RM1.14bn) and local retailers (+RM75m, Feb: -RM356m, YTD: -RM1.02bn) emerged as net buyers.

Outlook Bursa Malaysia could extend sideways consolidation pending fresh domestic catalysts (key support: 1,520-1,533) as investors awaits the final day of the 4Q23 results season, alongside with the US PCE data tonight that will determine the path of monetary policy. However, continued net inflows by foreign investors for the 4th consecutive month (YTD: +RM2.16bn 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 1,560-1,572-1,600 hurdles.

Source: Hong Leong Investment Bank Research - 29 Feb 2024