On track to surpass YTD high of 1,660 amid strong foreign inflows

Technical pick – TEOSENG 

KLCI: 1652.29 (13.3)
DOW: 41250.5 (10)
MSCI Asia: 185.83 (0)
FCPO (RM): 3909 (-14)
BRENT (USD): 79.55 (-1.88)
USDMYR: 4.348 (-0.001)
SGDMYR: 3.3349 (-0.003)
EURMYR: 4.8559 (-0.004)
AUDMYR: 2.949 (0.003)
GBPMYR: 5.7548 (0.019)
US: 10-yr yield (%) 3.8216 (0.006)
BNM:10-yr yield (%) 3.738 (-0.013)

Asia/US. Asian bourses ended mixed as traders adopted a wait-and-see stance, ahead of the NVDA results due Aug 28 and a raft of key US economic data (i.e. PCE inflation, personal spending, personal income data and the 2nd print of 2Q24 GDP) later this week. Investors also continued to evaluate the impact of strengthening Yen and potential revival in unwinding Yen carry trade following the diverging monetary policies between the BOJ and the Fed. The Dow closed at a fresh record high (+10 pts to 41,250) in a choppy session as investors awaited NVDA results for insights into the sustainability of the AI euphoria, as well as major economic data later this week that could indicate the trajectory of future Fed rate cuts. On economic front, consumer confidence rose to 6M high while the US FHFA house prices unexpectedly fell in June.

Malaysia. In contrary to the cautious regional markets, KLCI jumped 13.3 pts to 1,652.3, lifted mainly by banking stocks and continued foreign buying interests. However, market breadth was negative as we enter the peak of results season this week, with losers thumped gainers by 640 to 470. Local institutions emerged as major net sellers (-RM117m, Aug: -RM550m; YTD: +RM2.92bn) alongside local retailers (-RM47m, Aug: -RM665m; YTD: -RM4.63bn) while foreign institutions (+RM164m, Aug: +RM1.21bn; YTD: +RM1.71bn) emerged as notable net buyers. 

Outlook In wake of the encouraging economic and earnings outlook, a sustained RM appreciation, Fed’s pivot and increased risk appetite by foreigners, KLCI’s ongoing rebound is poised to revisit 1,660-1,680-1,700 levels following a strong breakout above 1,638 (resistance-turned-support) yesterday. 

Technically, TEOSENG is rebuilding its base above support trendline near RM1.85 (50D MA). A decisive breakout above RM2.00 psychological barrier should propel the stock higher towards RM2.13 (61.8% FR) and RM2.26 (76.4% FR). Major supports are pegged at RM1.80-1.85 levels.

Source: Hong Leong Investment Bank Research - 28 Aug 2024