Awaiting a breakthrough from Budget 2025 

Technical pick: MNHLDG

KLCI: 1641.44 (8.8)
DOW: 43239.05 (161.4)
MSCI Asia: 189.13 (-0.8)
FCPO (RM): 4292 (14)
BRENT (USD): 74.45 (0.23)
USDMYR: 4.309 (0.012)
SGDMYR: 3.2794 (-0.003)
EURMYR: 4.679 (-0.002)
AUDMYR: 2.8821 (0.008)
GBPMYR: 5.5985 (0.005)
US: 10-yr yield (%) 4.0906 (0.078)
BNM:10-yr yield (%) 3.78 (0.015)

Asia/US. Despite another record closing from Dow, most Asian markets ended lower. Sentiment was dampened by further slide in SHCOMP (-1% to 3,169) after another much-anticipated policy briefing that failed to meet market expectations, raising doubts that the recent stimulus measures announced will be enough to revitalise its beleaguered economy. Dow jumped 161 pts to close at a fresh record high of 43,239, buoyed by strong earnings (i.e. TSM and TRV) and positive economic data (i.e. solid retail sales report and lower weekly jobless claims). Meanwhile, the US10Y bond yield soared 8 bps to 4.08% as the strong economic data supported the view that the US economy remains resilient, dampening expectations for future aggressive rate cuts. After hours, NFLX shares rallied 4.7% amid upbeat earnings.      

Malaysia. In tandem with another record closing from Dow and the return of net inflows by foreigners, KLCI rose 8.8 pts to 1,641.4, led by buying interests on MAYBANK, PBBANK, RHBBANK, TENAGA and PCHEM. Market breadth returned to positive at 1.62 vs 0.49 previously. Foreign institutions were major net buyers for a 3rd consecutive day (+RM226m, Oct: -RM756m, YTD: +RM2.80bn) while local institutions (-RM187m, Oct: +RM577m, YTD: +RM1.88bn) alongside local retailers (-RM39m, Oct: +RM179m, YTD: -RM4.68bn) emerged as major net sellers.

Outlook As investors await the details of Budget 2025 today, KLCI is likely to trend sideways with an upside bias (support: 1,606-1,625; resistance: 1,650-1,663-1,677), buoyed by the bullish Wall St and the return of net foreign inflows (potentially rotating from the steeply overbought China & Hong Kong markets). However, the outlook is tempered by ongoing concerns about a potential regional conflict in the Middle East, the political dynamics during the US elections countdown (Nov 5) coupled with uncertainty surrounding China's stimulus measures and its economic recovery roadmap. 

Technically, after the healthy pullback from all-time high at RM1.12 (Aug 12) to a low of RM0.82 (Aug 29), MNHLDG has been firming up to close at RM0.90 yesterday. A successful breakout above the downtrend resistance near RM0.91 (20D MA) may boost upside potential towards RM0.96 (50% FR), RM1.00 (61.8% FR) and RM1.04 (76.4% FR) levels. Meanwhile, key supports are identified at RM0.87 (23.6% FR) and RM0.82. 

Source: Hong Leong Investment Bank Research - 18 Oct 2024