Overhead resistance clusters at 1,690-1,710 levels

Technical pick – TRC 

KLCI: 1678.19 (-0.6)
DOW: 41563.08 (228)
MSCI Asia: 185.63 (-0.8)
FCPO (RM): 3932 (-1)
BRENT (USD): 77.52 (-1.28)
USDMYR: 4.3575 (0.037)
SGDMYR: 3.3344 (0.017)
EURMYR: 4.8233 (0.035)
AUDMYR: 2.9557 (0.015)
GBPMYR: 5.7242 (0.028)
US: 10-yr yield (%) 3.9034 (0)
BNM:10-yr yield (%) 3.747 (-0.012)

Asia/US. Prior to the release of major US ISM and jobs data, Asian markets ended lower as investors assessed the BOJ’s recent hawkish shift (meeting: 19-20 Sep) and China’s heightened economic concerns arising from a prolonged property slump while its General PMI slid to the lowest since Dec 22 at 50.1. Dow was closed overnight due to Labour Day holiday. WoW, the benchmark jumped 388 pts to 41,563 amid ‘Goldilocks’ economy and slower inflation growth, cementing a rate-cut optimism in Sep meeting. This week, investors will parse on the Aug nonfarm payrolls, ISM manufacturing & services data, and job openings for further economic and policy insights. 

Malaysia. After rallying 43.1 pts WoW and 53.2 pts MoM, KLCI slipped as much as 7 pts in early trades before paring its losses to -0.6-pt at 1,678.2. Market breadth was positive for a 2nd session at 1.45 vs 1.83 last Friday. Foreign institutions (+RM56m, YTD: +RM3.10bn) emerged as major net buyers while local institutions (-RM38m, YTD: +RM1.73bn) alongside local retailers (-RM18m, YTD: -RM4.82bn) were notable net sellers. 

Outlook On the back of encouraging economic outlook and resilient corporate earnings, strong FDI commitments, supply chains shift, RM appreciation and Fed’s pivot, KLCI’s rebound from the Aug 5’s Black Monday (near 1,529) may continue to revisit 1,690-1,710 levels (support: 1,638-1,660) after a brief sideways consolidation, underpinned by an increased risk appetite by foreigners (Jul: +RM1.3bn, Aug: +2.5bn, YTD: +RM3.10bn). 

Technically, after correcting 22.6% from 5Y high of RM0.53 (3 Apr) to a low of RM0.41 (5 Aug), TRC is showing signs of bottoming up. The stock will need a convincing breakout above a cluster of hurdles at RM0.44-0.47 for further gains towards RM0.50-0.53 zones. Major supports are pegged at RM0.38 (100W MA) and RM0.41.  

Source: Hong Leong Investment Bank Research - 3 Sept 2024