All eyes on Budget 2025 to cushion external vagaries 

Technical pick: SIMEPROP

KLCI: 1633.6 (-7.4)
DOW: 42864 (410)
FCPO (RM): 4350 (115)
BRENT (USD): 79 (-0.4)
USDMYR: 4.288 (-0.004)
SGDMYR: 3.284 (-0.002)
EURMYR: 4.691 (-0.002)
GBPMYR: 5.606 (-0.008)
US: 10-yr yield (%) 4.10 (0.04)
BNM:10-yr yield (%) 3.79 (0.00)

Asia/US. Asian markets ended mixed as investors recalibrated the Fed’s rate-cut path following a hotter-than-expected core US CPI inflation. Ahead of the widely anticipated China’s MOF fiscal stimulus press conference on Oct 12, sentiment was also dampened by a 2.55% slump on SHCOMP amid concerns about the effectiveness of a string of monetary stimulus measures announced in late Sep. The Dow ended at a fresh record high (+410 pts to 42,864) following lower US core PPI MoM data and upbeat banks’ earnings (i.e. JPM, WFC and BFK). This week, focus will be on the retail sales report and speeches from several Fed officials. Meanwhile, the earnings season will hit full stride with reports expected from mega caps like UNH, JNJ, BAC, NFLX and PG.

Malaysia. Taking cues from the mixed regional markets and a 5.7% slide on PBBANK (as investors weighed its proposal to buy a 44.2% stake in LPI and potential shares overhang from the Teh family to undertake a ROFS to eligible staffs, investors and directors), KLCI lost 7.4 pts to 1,633.6 (+3.5 pts WoW). Losers thumped gainers by 546 to 420 while daily volume fell 13% to 2.3bn shares valued at RM2.67bn. Foreign institutions were major net sellers (-RM216m, Oct: -RM1.04bn, YTD: +RM2.51bn) while local retailers (+RM135m, Oct: +RM148m, YTD: -RM4.71bn) and local institutions (+RM81m, Oct: +RM895m, YTD: +RM2.2bn) emerged as major net buyers.

Outlook Ahead of the Budget 2025 announcement on Oct 18, KLCI is trending sideways with major supports pegged at 1,600-1,606-1,625 levels while resistances are situated at 1,652-1,660-1,684 levels. Cautious and weak buying momentum are likely to prevails as investors weigh the ongoing US 3Q24 earnings results, the risk of long-feared regional war in the Middle East and the latest China’s fiscal stimulus from MOF last Saturday. 

Technically, SIMEPROP’s successful closing above multiple key MAs imply potential bullish triangle breakout to aim for the RM1.58 (76.4% FR) and RM1.69 (52W high) upside targets, while downside is cushioned at RM1.43 (50D MA), RM1.40 (38.2% FR) and RM1.34 (23.6% FR) levels. 

Source: Hong Leong Investment Bank Research - 14 Oct 2024