Range Bound Mode Amid a Mixed Budget 2025 and External Woes 

Technical Pick: ENGTEX

KLCI: 1645.99 (4.5)

DOW: 43275.91 (36.9)

MSCI Asia: 191.39 (2.3)

FCPO (RM): 4255 (-23)

BRENT (USD): 73.06 (-1.39)

USDMYR: 4.306 (-0.003)

SGDMYR: 3.2807 (0.001)

EURMYR: 4.6693 (-0.01)

AUDMYR: 2.89 (0.008)

GBPMYR: 5.6127 (0.014)

US: 10-yr yield (%) 4.0828 (-0.008)

BNM:10-yr yield (%) 3.78 (0.015)

Asia/US. Asian markets ended higher, driven by SHCOMP (+2.9% to 3,261.6) and HSI (+3.6% to 20,804) amid China’s better-than-expected  3Q GDP, alongside retail sales, industrial production and fixed asset investments in Sep. Sentiment was also boosted by President Xi’s emphasis on technology development and a slew of PBOC’s statements which reignited optimism over policy support. Dow tumbled as much as 203 pts before ending +37 pts at 43,276, buoyed by strong earnings from NFLX, which overshadowed disappointing earnings from PG and AXP, coupled with soft housing starts and building permits data. This week, key economic readings to focus include S&P Global’s PMI for manufacturing and services, new and existing home sales, as well as Fed’s Beige Book. On earnings wise, major reports are expected from TSLA, KO, 3M, GM and VZ. 

Malaysia. In line with the strong regional markets and growing optimism surrounding Budget 2025, KLCI rose 4.6 pts to 1,646, bolstered by a resurgence in foreign net inflows. Market breadth was positive for a 2nd day at 1.51 vs 1.62 previously. Foreign institutions were major net buyers for a 4th consecutive day and recorded its 1st weekly gain in 4 weeks (+RM117m, WoW: +RM404m, Oct: -RM639m), while local institutions (-RM65m, WoW: -RM383m, Oct: +RM512m) alongside local retailers (-RM52m, WoW: -RM212m, Oct: +RM127m) emerged as major net sellers.

Outlook Overall, as there are no major surprises in Budget 2025 to materially excite or disturb the market rhythm, KLCI is likely to trend sideways with an upside bias (support: 1,619-1,625; resistance: 1,666-1,674-1,684), buoyed by the bullish Wall St and the return of net foreign inflows (1st weekly gain in four). However, the outlook could be 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. 

ENGTEX is poised for a bullish triangle breakout after the healthy pullback from RM0.79 (52W high on Aug 9) to a low of RM0.555 (Sep 12), before firming up to RM0.63, above the 200D MA support at RM0.605. A successful breakout above the downtrend resistance near RM0.645 (38.2% FR) may boost upside potential towards RM0.67 (50% FR), RM0.70. (61.8% FR) and RM0.735 (76.4% FR) levels. Meanwhile, key supports are identified at RM0.605 and RM0.575 (support trendline).

Source: Hong Leong Investment Bank Research - 21 Oct 2024