Buying interests remain tepid ahead of the Budget 2025 and external uncertainties 

Technical pick: OSK

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. Following record closings on Wall St spurred by lower US core PPI (MoM) data and strong bank earnings, most Asian markets edged higher. Meanwhile, the SHCOMP soared 2.07% amid volatile trading as investors assessed concerns over sluggish exports, a declining PPI, and the highly-anticipated fiscal stimulus announced on Oct 12, which lacked specific details. The Dow ended at a fresh record high (+201 pts to 43,065) as investors awaited the key corporate earnings following upbeat results from mega banks last week. This week, focus will be on the retail sales report and speeches from several Fed officials while the 3Q24 earnings is set to kick into high gear with reports expected from mega caps like UNH, JNJ, BAC, NFLX and PG for further vindication of soft-landing bets.

Malaysia. . In line with higher regional markets, KLCI soared 3 pts (off intraday high +9 pts) to 1,636.5, led by gains on PBBANK, CDB, KLK, PETDAG and CIMB. Despite the headline gain, market breadth weakened to 0.52 vs 0.77  last Friday while daily volume fell 2.6% to 2.24bn shares valued at RM2.09bn. Foreign institutions were major net sellers for a 2nd session (-RM65m, Oct: -RM1.1bn, YTD: +RM2.45bn) while local retailers (+RM10m, Oct: +RM158m, YTD: -RM4.7bn) and local institutions (+RM55m, Oct: +RM950m, YTD: +RM2.25bn) emerged as major net buyers.

Outlook Ahead of the Budget 2025 announcement on Oct 18, KLCI is likely to trend sideways, with major supports pegged at 1,600-1,606-1,625 while resistances are near 1,652-1,660-1,684 levels. Cautious sentiment and weak buying momentum are likely to prevail as investors navigate the ongoing US 3Q24 earnings results, the risk of long-feared regional war in the Middle East (as the US is sending an advanced missile defence system and associated troops to Israel), and the effectiveness of China’s outsized stimulus measures to address its economic malaise. 

Technically, OSK is poised for a bullish triangle breakout after closing above multiple key MAs. A successful cross above RM1.62 (downtrend line) may spur greater upside towards RM1.72 (52W high) and RM1.80 (17Y high) targets, while downside is cushioned at RM1.55 (lower BB) and RM1.52 (200D MA) levels. 
 

Source: Hong Leong Investment Bank Research - 15 Oct 2024