To revisit 4Y high near 1,684 amid strong foreign net inflows

Technical pick: AEON

KLCI: 1660.35 (8.9)
DOW: 40736.96 (-92.6)
MSCI Asia: 179.9 (-0.1)
FCPO (RM): 3868 (-17)
BRENT (USD): 69.19 (-2.65)
USDMYR: 4.3422 (-0.03)
SGDMYR: 3.3275 (-0.02)
EURMYR: 4.7932 (-0.041)
AUDMYR: 2.8948 (-0.017)
GBPMYR: 5.6873 (-0.036)
US: 10-yr yield (%) 3.6423 (-0.058)
BNM:10-yr yield (%) 3.748 (-0.003)

Asia/US. Most Asian bourses rose in tandem with an overnight rally on Wall St as investors awaited the key US CPI (11 Sep), PPI (12 Sep), consumer sentiment (13 Sep), and retail sales (17 Sep) data for further Fed’s economic and policy insights. Sentiment was also boosted by an upbeat China's exports, overshadowed disappointing imports amid weak domestic demand. The Dow pared its early 412-pt slide to close -93 pts at 40.736 as investors awaited the crucial key economic readings this week and weighed election risks ahead of the first debate between Trump and Kamala in the evening. Meanwhile, a technical rebound in tech behemoths lifted broader sentiment, countering cautious remarks from JPM, GS and BAC executives that pressured financial stocks.

Malaysia. In line with the positive external markets, KLCI jumped 8.9 pts to 1,660.4 after sliding 27.3 pts in the 6th consecutive session, led by a mix of financial, healthcare and telco stocks. Market breadth remained negative for the 6th straight day at 0.96 vs 0.45 previously while daily volume fell 9.8% to 3.05bn shares valued at RM3.78bn (-1.8% d-d). Foreign institutions (+RM294m, Sep: +RM1.16bn, YTD: +RM4.2bn) maintained their net inflows for the 13th consecutive day while local institutions (-RM275m, Sep: -RM1.17bn, YTD: +RM590m) alongside local retailers (-RM19m, Sep: +RM14m, YTD: -RM4.80bn) emerged as major net sellers. 

Outlook Ahead of the 1st US presidential election debate (10 Sep) and key US economic indicators before the Fed meeting next week, KLCI is expected to extend its range bound consolidation (support: 1,629-1,638; resistance: 1,660-1,690-1,700). However, downside may be limited due to: (i) positive domestic economy and stable corporate earnings, (ii) strong FDI commitments, (iii) political stability and progressive domestic reform initiatives, (iv) RM appreciation, (v) Fed’s pivot, and (vi) increased risk appetite by foreigners (YTD: +RM4.20bn) and a reprieve in foreign shareholding (June/July/Aug:19.5/19.6/19.8%). 

Technically, AEON is currently building its base at 200D MA near RM1.30. A successful breakout above the RM1.50 psychological barrier may spur greater upside towards RM1.55 (YTD high) and RM1.69 (52w high) region.

Source: Hong Leong Investment Bank Research - 11 Sept 2024