Volatility ahead amid persistent foreign net outflows 

Technical stockpick: AWC

KLCI: 1615.08 (4.6)
DOW: 42233.05 (-154.5)
MSCI Asia: 187.31 (0.3)
FCPO (RM): 4621 (-16)
BRENT (USD): 71.12 (-0.3)
USDMYR: 4.3785 (0.016)
SGDMYR: 3.3064 (0.007)
EURMYR: 4.7369 (0.02)
AUDMYR: 2.8787 (-0.001)
GBPMYR: 5.6831 (0.024)
US: 10-yr yield (%) 4.2541 (-0.028)
BNM:10-yr yield (%) 3.897 (0.036)

Asia/US. Ahead of the BOJ meeting on Oct 31 and the contentious US elections on Nov 5, most Asian markets closed mixed as investors prepared for a busy week of major US corporate earnings (including MSFT, GOOGL, AMD, V, META, TSLA, K, AAPL, AMZN, MA, and XOM) and key economic data (job openings, NF payrolls, 3Q GDP, and PCE inflation) that will influence the Fed's Nov 7 meeting. Ahead of the major US corporate earnings and economic data, Dow fell 154 pts as investors digested cooling job openings and higher-than-expected increase in home prices. In contrast, the Nasdaq rose 0.78% on optimism for strong earnings from key tech companies. After hours, GOOGL shares climbed on positive earnings, while AMD shares fell due to disappointing sales forecasts.

Malaysia. After tumbling 35.5 pts over six consecutive session, KLCI gained 4.6 pts to 1,615.1, boosted by bargain hunting in telco, banking and utilities stocks. Market breadth improved to 0.99 from 0.38 previously while trading volume remained tepid at 2.48bn shares (+1.2%) valued at RM2.26bn. Local institutions (+RM362m, Oct: +RM1.2bn, YTD: +RM2.51bn) were the major net buyers for the 5th straight day while local retailers (-RM16m, Oct: +RM93m, YTD: -RM4.76bn) and foreign institutions (-RM346m, Oct: -RM1.3bn, YTD: +RM2.25bn) were the notable net sellers.

Outlook Ahead of the 3Q24 local results season, the KLCI is likely to consolidate further (support: 1,590-1,600; resistance: 1,625-1,635-1648) a lack of domestic rerating catalysts and continued foreign net outflows (Oct MTD: -RM1.3bn, Sep: RM510m) in the near term. Moreover, the outlook may be tempered by external risks, including lingering Middle East turmoil, US elections, and uncertainties surrounding China's stimulus measures and its economic recovery plans. 
Technically, after sliding 36.9% from all-time high of RM1.37 (Jul 22) to RM0.865, AWC may be ripe for a technical rebound after establishing a base above the RM0.81 (lower BB). A successful breakout above RM0.925 (200D MA) could signal a resumption of uptrend towards RM0.99 (50D MA), RM1.02 (38.2% FR) and RM1.10 (neckline) levels.

Source: Hong Leong Investment Bank Research - 30 Oct 2024