Volatility ahead with crucial supports situated at 1,522-1,534 zones 

KLCI: 1538.02 (-13.4)
DOW: 39087.38 (91)
MSCI Asia: 174.09 (1.2)
FCPO (RM): 3966 (-4)
BRENT (USD): 83.55 (-0.07)
USDMYR: 4.746 (0.003)
SGDMYR: 3.5246 (-0.003)
EURMYR: 5.133 (-0.013)
AUDMYR: 3.0854 (0.001)
GBPMYR: 5.9947 (-0.013)
US: 10-yr yield (%) 4.1798 (-0.07)
BNM:10-yr yield (%) 3.85 (-0.01)

Asia/US. Despite a mixed China PMI data in Feb, the MSCI All Countries Asia Pacific index rose 0.67% or 1.2 pts to 174.1, mirroring the record closings of S&P 500 and NASDAQ after key PCE inflation data eased as expected in Jan, propelling bets that the Fed will cut interest rates by June. The Dow gained 91 pts to 39,087 while the Nasdaq sand S&P 500 surged to end at all-time highs, amid diminishing concerns of delaying rate cuts in 2H24 after the Feb’s ISM data fell more than anticipated, and the consumer sentiment was sharply revised downward. Major events this week are Jan labour report and Powell's semi-annual reports to Congress, as well as the ISM Services PMI, JOLTS job openings and factory orders data.

Malaysia. After surging 96.8 pts YTD and 38.4 pts in Feb, KLCI made a weak debut in March, losing 13.4 pts last Friday to 1,538, led by selloff in selected telco, utilities, banking and gaming stocks. Market breadth remained negative for a 6th straight session at 0.58 vs 0.54 a day ago. For a 3rd straight day, foreign investors net sold RM199m (Feb: +RM1.3bn, YTD: +RM1.8bn) whilst local institutions (+RM144m, Feb: -RM969m, YTD: -RM837m) and local retailers (+RM55m, Feb: -RM354m, YTD: -RM966m) emerged as net buyers. 

Outlook After recording a 5th consecutive monthly gain in Feb, KLCI is likely to extend its profit taking consolidation after rallying 83.4 pts YTD as investors assess the recently-concluded 4Q23 results, while awaiting firmer domestic and external leads. Technically, barring a decisive fall below 1,522-1,534 supports, the odds would still favour the bulls to resume its ascent in March. However, it is worth noting that historically, the KLCI has performed poorly in March, with average declines of 3.3% and 0.8% over the past 5 and 10 years, respectively. In March, major supports are situated near 1,500-1,522-1,534 while formidable hurdles are pegged at 1,560-1,578-1,600 levels.

VIRTUAL PORTFOLIO. Last Friday, we had closed our position on ICON (11.1% loss) after hitting cut loss levels.
 

Source: Hong Leong Investment Bank Research - 4 Mar 2024