Sentiment dampened amid extended selling spree by foreigners 

KLCI: 1531.51 (-5.5)
DOW: 38661.05 (75.9)
MSCI Asia: 175.39 (1.2)
FCPO (RM): 4071 (-10)
BRENT (USD): 82.96 (0.92)
USDMYR: 4.7323 (-0.003)
SGDMYR: 3.529 (0.006)
EURMYR: 5.147 (0.009)
AUDMYR: 3.0873 (0.016)
GBPMYR: 6.0249 (0.018)
US: 10-yr yield (%) 4.102 (-0.05)
Mal: 10-yr MGS (%) 3.84 (-0.01)

Asia/US. Bucking a slide on Wall St overnight, most Asian markets recorded small gains as investors awaited Powell’s semi-annual testimony and potential proactive fiscal and prudent monetary policy measures from the ongoing NPC, as Beijing targets a 5% GDP growth. The Dow gained 76 pts following a 2-day slide of 502 pts as investors digested Powell’s prepared speech and the slightly-below forecasts ADP and JOLTS reports. Powell reiterated that the US economy evolves broadly as expected and the policy rate is likely at its peak for this tightening cycle, reinforcing hopes that interest rate cuts are incoming this year if inflation continues to trend sustainably toward the 2% goal.  

Malaysia. After surging 82.3 pts YTD, KLCI settled -5.5 pts at 1,531.5 as foreigners continued to trim their positions following net purchases totalling RM3.8bn from Nov-Feb. Market breadth stayed negative for the 9th consecutive day at 0.72 vs 0.58 a day ago. Foreign investors turned net sellers for the six days in a row (-RM451m, Mar: -RM1.46bn, YTD: +RM545m). Meanwhile, local institutions emerged as the major net buyers for six straight days (+RM373m, Mar: +RM1.28bn, YTD: +RM302m) followed by local retailers (+RM78m, Mar: +RM173m, YTD: -RM848m). 

Outlook KLCI is poised for further profit taking consolidation after rallying 76.8 pts YTD and 38.4 pts in Feb as investors weighed the latest batches of slowing US economic data and Powell’s speech, more updates from the ongoing China’s NPC coupled with a resumption of foreign net selling (6th consecutive session amounting RM1.9bn). Technically, barring a decisive fall below 1,500-1,518-1,527 supports, the odds would still favour the bulls to resume its ascent after a brief consolidation (resistance: 1,550-1,570-1,600). 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. 
 

Source: Hong Leong Investment Bank Research - 7 Mar 2024