Critical support at 1,518-1,525 to prevent further rout to 1,495 amid persistent net outflows by foreigners

KLCI: 1538.13 (-16.4)
DOW: 39043.32 (37.8)
MSCI Asia: 176.25 (-0.5)
FCPO (RM): 4212 (17)
BRENT (USD): 84.03 (2.11)
USDMYR: 4.686 (0.008)
SGDMYR: 3.5146 (0)
EURMYR: 5.1201 (0.006)
AUDMYR: 3.0971 (0.002)
GBPMYR: 5.9885 (0.005)
US: 10-yr yield (%) 4.1899 (0.039)
BNM:10-yr yield (%) 3.843 (0.006)

Asia/US. Asian markets ended mixed as US headline and core inflations topped estimates, sparking concerns that the Fed may adopt higher for longer rates to curb sticky inflation. Additionally, apprehensions lingered regarding China's economic trajectory and policy responses to its sluggish growth, and growing speculation that the BOJ could adjust its monetary policy as soon as 19 Mar policy meeting. The Dow jumped as much as 197 pts before paring its gains to 38 pts at 39,043 while the Nasdaq lost 0.5% to 16,178 after hitting a fresh record high a day ago, as investors braced for the PPI and retail sales reports due tonight, which will provide more clarity on the economic performance, ahead of the FOMC decision on 20 Mar.

Malaysia. Mirroring the lower regional markets, KLCI snapped a 4-day winning streak amounting 23.1 pts before closing -16.4 pts at 1,538.1, led by selldown on selected heavyweights eg CDB, PCHEM, MAXIS, IOICORP, SIMEPLNT, PPB and HLBANK. Despite the headline loss, market breadth was positive for a 3rd session at 1.09 vs 1.04 previously. Foreign investors resumed their net selling (-RM105m, Mar: -RM1.86bn, YTD: +RM139m), followed by local retailers (-RM9m, Mar: +RM83m, YTD: -RM938m) whilst local institutions emerged as the major net buyers (+RM114m, Mar: +RM1.78bn, YTD: +RM798m).

Outlook. In wake of the recovery in RM (vs USD) from 26Y low of RM4.80 to RM4.68, expectations of imminent policy easing cycles, as well as a potential reduction in foreign net outflows (following net sales amounting to RM2.28bn in Mar MTD), KLCI may attempt to revisit the YTD high of 1,559 levels after a brief consolidation. However, we reckon that the market is likely to stay choppy ahead, as investors fret over global inflation and rates outlook before the Mar FOMC meeting on 20 Mar. Major supports are pegged at 1,500-1,518-,1525 while resistances are situated at 1,559-1,580 levels.

Source: Hong Leong Investment Bank Research - 14 Mar 2024