Volatility prevails amid a resumption of foreign net selling

KLCI: 1539.27 (1.3)

DOW: 38989.83 (-97.5)

MSCI Asia: 174.69 (0.6)

FCPO (RM): 3934 (-4)

BRENT (USD): 82.8 (-0.75)

USDMYR: 4.7225 (-0.024)

SGDMYR: 3.5157 (-0.009)

EURMYR: 5.1235 (-0.01)

AUDMYR: 3.0808 (-0.005)

GBPMYR: 5.987 (-0.008)

US: 10-yr yield (%) 4.2131 (0.033)

BNM:10-yr yield (%) 3.848 (-0.016)

Asia/US. Leading to an eventful week from the US (eg ISM, jobs data, Powell’s speech) and China (NPC, inflation, trade data), most Asian markets ended cautiously higher, buoyed by all-time high on NIKKEI 225 amid a strong rally in technology stocks and BOJ’s commitment of maintaining a prolonged run of ultra-easy monetary settings. The Dow fell 97 pts to 38,990, with investors keenly await a batch of economic readings and speeches from Fed officials to assess the health of the US economy and insights into the Fed’s policy direction.

Malaysia. After surging 83.4 pts YTD and 38.4 pts in Feb, KLCI continued its profit taking consolidation, gaining 1.1 pts at 1,539.3 after soaring as much as 9.1 pts intraday. Market breadth stayed negative for the 7th consecutive day at 0.79 vs 0.58 last Friday as investors evaluated the recently-concluded mixed 4Q23 results and ongoing foreign net selling. After net buying RM1.3bn in Feb and RM1.8bn YTD, foreign investors turned net sellers for a 4th consecutive day (-RM318m, Mar: -RM517m, YTD: +RM1.48bn), followed by local retailers (-RM16m, Mar: +RM39m, YTD: -RM962m). Meanwhile, local institutions emerged as the major net buyers for a 4th straight session (+RM334m, Mar: +RM478m, YTD: -RM503m).

Outlook KLCI is poised for further profit taking consolidation after rallying 84.6 pts YTD as investors assess the recently-concluded 4Q23 results and resumption of foreign net selling (4th consecutive day amounting RM768m), 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 1,500-1,524-1,535 while formidable barriers are pegged at 1,560-1,578-1,600 levels.

VIRTUAL TECHNICAL PORTFOLIO. Yesterday, we had closed our positions on ITMAX (7.7 gain) and YTLPOWR (5.3% gain).

Source: Hong Leong Investment Bank Research - 5 Mar 2024