Extended consolidation amid heavy selldown by foreigners

KLCI: 1536.98 (-2.3)

DOW: 38585.19 (-404.6)

MSCI Asia: 174.21 (-0.5)

FCPO (RM): 3999 (13)

BRENT (USD): 82.09 (-0.71)

USDMYR: 4.7352 (0.013)

SGDMYR: 3.5231 (0.007)

EURMYR: 5.1385 (0.015)

AUDMYR: 3.0715 (-0.009)

GBPMYR: 6.0069 (0.02)

US: 10-yr yield (%) 4.1525 (-0.061)

BNM:10-yr yield (%) 3.864 (0.016)

Asia/US. Asian markets ended mixed as investors awaited further cues from significant global central bank meetings concerning economic data and interest rate trends. Moreover, investors are anticipating more updates from the ongoing NPC for signs of clear and concrete policy plans as Beijing targets 5% GDP growth. The Dow plunged 405 pts to 38,585, triggered by megacap routs amid growing concerns about a potential economic slowdown (from a soft-landing narrative), with investors weighed the sluggish ISM Services and factory orders in the run-up to Powell’s testimony to Congress and upcoming jobs data.

Malaysia. After surging 84.6 pts YTD and continued foreigners’ profit taking selldown (after net buying RM3.8bn from Nov-Feb), KLCI tumbled as much as 20.4 pts before paring its losses to 2.3 pts at 1,537. Market breadth stayed negative for the 8th consecutive day at 0.58 vs 0.79 previously. Foreign investors turned net sellers for a 5th consecutive day (-RM488m, Mar: -RM1bn, YTD: +RM996m). Meanwhile, local institutions emerged as the major net buyers for a 5th straight session (+RM432m, Mar: +RM910m, YTD: -RM71m) followed by local retailers (+RM56m, Mar: +RM95m, YTD: -RM926m).

Outlook KLCI is poised for further profit taking consolidation after rallying 82.3 pts YTD and 38.4 pts in Feb as investors assess the latest batches of slowing US economic data, Powell’s speech, more updates from the ongoing China’s NPC and a resumption of foreign net selling (5th consecutive session amounting RM1.4bn). Technically, barring a decisive fall below 1,500-1,518-1,526 supports, the odds would still favour the bulls to resume its ascent in March (resistance: 1,550-1,560-1,578). 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.

VIRTUAL TECHNICAL PORTFOLIO. On the back of weakening technical, we had closed our positions on MAG (5% loss), AEON (0.9% gain), FOCUSP (2.9% gain), PERDANA (2% loss), CAPITALA (2.8% loss), UMC (4% gain), M&A (0% return), ANCOMNY (1% loss) and MRCB (4.1% loss) yesterday.

Source: Hong Leong Investment Bank Research - 6 Mar 2024