Heavy profit-taking and poor market breadth to cap gains at 1,690-1,700 territory

Technical pick – BIMB 

KLCI: 1653.55 (-21.7)
DOW: 41335.05 (243.6)
MSCI Asia: 185.42 (-0.5)
FCPO (RM): 3962 (22)
BRENT (USD): 79.94 (1.29)
USDMYR: 4.311 (-0.033)
SGDMYR: 3.3145 (-0.02)
EURMYR: 4.7827 (-0.055)
AUDMYR: 2.9408 (-0.011)
GBPMYR: 5.6877 (-0.057)
US: 10-yr yield (%) 3.8615 (0.027)
BNM:10-yr yield (%) 3.752 (0.005)

Asia/US. Asian bourses ended mostly lower, triggered by major losses in Korea, Taiwan and China markets amid losses in the technology sector following underwhelming guidance from NVDA. However, expectations of a Fed’s pivot helped to mitigate overall losses. The Dow soared 244 pts to close at record high at 41,335, recovering strongly from a Black Monday rout earlier this month. Ahead of the key PCE data tonight, fresh data showed the US economy is holding firm following lower weekly jobless claims and an upward revision in US 2Q GDP growth 3% (from 2.8%), limiting the impact of NVDA’s 6.4% plunge in share prices. 

Malaysia. After surging 39.5pts in three straight session, KLCI tumbled 21.7 pts to 1,653.6, led by heavy profit taking on CIMB, MAYBANK, PBBANK, GENTING, GENM, YTL and YTLPOWR. Market breadth was bearish for a 8th consecutive day at 0.37, led by sell down in property, technology, financial services and construction stocks. Foreign institutions (+RM274m, Aug: +RM2.13bn; YTD: +RM2.63bn) alongside local retailers (+RM26m, Aug: -RM893m; YTD: -RM4.74bn) were notable net buyers while local institutions emerged as net sellers (-RM300m, Aug: -RM1.35bn; YTD: +RM2.11bn).

Outlook In wake of the encouraging economic outlook and resilient corporate earnings, RM appreciation, Fed’s pivot and increased risk appetite by foreigners, KLCI’s ongoing rebound is poised to revisit 1,690-1,700 levels, barring a major breakdown below the critical uptrend line support near 1,629-1,638 levels. 

Technically, BIMB is building its base near RM2.50-2.54. The stock will need convincing breakout above RM2.70 (76.4% FR) to fuel further upside towards RM2.80 (27M high) and RM2.90 (123.6% FR) zones. 

Source: Hong Leong Investment Bank Research - 30 Aug 2024